The case before the High Court for judicial review of the IR35 tax
on independent contractors is continuing into a second week of
hearings. The first hearings took place last Tuesday. Additional
hearings have been scheduled for today and tomorrow.
The Professional Contractors Group (PCG), which was formed to
campaign against the IR35 tax is arguing that the tax should be
lifted. It says IR35 means that many small companies, mainly in IT
and engineering, are unable to operate on equal terms with their
larger competitors since their turnover is treated as salary for
tax and National Insurance Contribution (NIC) purposes. They are
therefore, says the PCG, unable to make or retain profits, unable
to allow business expenses such as training and equipment against
tax and cannot invest for the future or plan to grow or
develop.
Last week, the judge hearing the case suggested that a
consultant working on a contract for a company could be deemed to
be an employee and entitled to company benefits. The PCG said even
if the judge refused to rule against IR35, entitlement to employee
benefits would be a significant concession.
The government argues that IR35 was a necessary introduction to
close a loophole that allowed some people to avoid paying tax and
NICs by operating through a personal service company.
