Evidence that IT contractors are fleeing the country as a direct result of IR35 has begun to emerge, with many choosing the US and Holland to sidestep the heavy tax burden imposed by the new regulation.

Professionals have revealed to accountancyage.co.uk that they are turning to overseas work to escape the full burden of IR35, taking measures to register companies in countries such as the Republic of Ireland where the tax regimes are less onerous.

Richard Marriott, an IT consultant from Redditch, has signed a contract to start work in Bridgewater, New Jersey, in August. He said: "I'll have to leave my wife and family behind for months at a time. But I honestly don't see, if you are subject to IR35, how you stay in business."

Stuart Ranson has been commuting between Holland and his Hertfordshire home since January after ending his work in the UK because of IR35.

"We've been called tax cheats by the government. I pay more tax than most taxpayers, so how can I be a tax cheat?" he said.

A survey by the Professional Contractor's Group claims only around 40 per cent of contractors say they will definitely stay in the UK.

First published on accountancyage.co.uk