TaxPersonal TaxRevenue says IR35 is not ‘state aid’

Revenue says IR35 is not 'state aid'

Richard Plender, counsel for the Inland Revenue, has defended IR35 against allegations by the Professional Contractors Group that it effectively provides 'state aid' to large IT contracting companies.

Speaking during the afternoon session of the fourth day of hearings, Plender claimed IR35 was a ‘general measure’, not a piece of ‘targeted legislation’ aimed at favouring one industry sector or individual company over another.

He said the legislation did not name a particular industry sector, and could therefore not be construed as state aid, even if it happened to affect a specific category of business not named under the law.

Plender continued his attack on illegality claims lodged by the PCG, saying that while IR35 may be damaging and unfair, this did not mean that it was illegal and used examples from European law to back up his argument.

He reinforced the Revenue’s argument that IR35 was a measure aimed at stamping out tax avoidance, quoting headlines in newspapers and a letter from an accountant. He also dismissed an ICAEW report, which gave IR35 a rating of ‘three out of ten’.

During the morning session judge Mr Justice Burton, expressed concern over the internal guidance the Revenue had given to inspectors with regard to IR35 and said all the circumstances affecting the contractor and the contract should be taken into account when assessing IR35 liability.

The case continues this afternoon.

Links

AccountancyAge.com IR35 resource centre

The PCG website

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