TechnologyAccounting SoftwareContractors defeated in IR35 battle

Contractors defeated in IR35 battle

The Professional Contractors Group has lost its High Court legal challenge to change the UK government's controversial IR35 tax rules.

The Professional Contractors Group has lost its High Court legal challenge to change the UK government’s controversial IR35 tax rules.

The judgement, given this morning, means that contractors will need to make their first tax payments due under the regulations on 19 April.

Mr Justice Burton said: “I am satisfied that this legislation, whatever others, including the ICAEW [Institute of Chartered Accountants in England & Wales], may think of it, is not capable of challenge upon European grounds. With grateful thanks for the extremely full and lucid arguments and research of counsel, which have formed the entirety of the bedrock of my conclusions, I dismiss this application.”

Anti-IR35 body the Professional Contractors Group was given permission to take its case to the High Court in October. The controversial regulations came into force in April last year and removed many of the tax advantages previously held by contractors who operated through personal service companies.

But despite the judgement, PCG chairman Gareth Williams remained upbeat.

“The High Court has been the first authoritative body to listen to our concerns and has confirmed that we were right. The Revenue got it wrong, and, as a result, has damaged many small businesses, some of which have closed down and some have moved abroad,” he said.

“The Court has fortunately intervened to restrict further damage with a much more relevant set of guidelines, which prove that IR35 was unfair, unworkable and created an uncertain climate,” he added.

Williams claimed the court concurred with the PCG on every finding, including the issue that contractors are in competition with larger consultancies, and that IR35 would distort the marketplace.

The judicial hearing on IR35 ended almost two weeks ago, with the Revenue rebuffing claims by the PCG that IR35 violated European Law and could be construed as state aid for large companies.

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