The Professional Contractors Group (PCG), which was formed to
campaign against the IR35 tax on independent contractors, has
reported a recruitment agency, Computer People, to the Advertising
Standards Authority for claiming that potential clients can avoid
employment issues surrounding IR35 if they put an agent between
themselves and any contractors.
The government introduced the IR35 legislation in March 1999 to
remove what it saw as a loophole for IT contractors to trade as
limited companies to avoid tax and National Insurance
Contributions, in circumstances where the individual worker would
otherwise be an employee of the client for whom they work.
The Group believes that some agencies are using the confusion
and uncertainty surrounding the tax to their own advantage by
making claims aimed at scaring clients and contractors into using
an agent as the "middleman" in contract deals.
The PCG says that many contractors are now seeking work directly
from clients, rather than, as was usual, contract via an agency.
The IR35 legislation says that contractors are at risk of being
treated as "disguised employees" of their client for tax and NIC
purposes, but confers no employment rights directly.
According to the Group, Computer People is now using as a
"salespitch" a claim that if clients put an agent between
themselves and the contractor, there is no risk of employment
rights. However, the PCG believes that the use of an agent has no
bearing on this.
Director of the PCG, Ian Durrant, said:
"The Government's legislation has created a
mine-field of real confusion and chaos in the contracting sector.
However, some agencies are now capitalising on this fear,
uncertainty and doubt to make dubious claims for their own
commercial advantages. It is bad enough that our members have to
contend with the real problems that this legislation has brought,
without Computer People and others using this climate to try to
'scare' clients away from contracting directly. The agency
regulatory bodies should make a clear statement about this practice
and condemn the use of such claims to build a business."
