PCG founder finally admits IR35 defeat

Link: Track the IR35 story

Andy White set up the PCG in May 1999 following the introduction of IR35, to represent contractors and consultants opposed to the rules.

But now White admits that waiting or hoping for political change to turn back the clock to pre-IR35 days is naive.

‘The PCG has stopped serving its purpose. The reality of the situation is that IR35 is here to stay, but as the dust settles it is becoming clearer how individuals can take responsibility for their own affairs and move their businesses confidently outside IR35,’ White said.

IR35 is the name of the rules in the Finance Act 2000 which affect personal services companies. The government had argued that many people were avoiding paying additional tax and National Insurance contributions by claiming to be a contractor, when they were actually an employee.

But White, who resigned from the PCG in September last year, maintains that although the battle to abolish IR35 proved fruitless, progress has been made.

Research conducted among the 15,000-strong subscribers of his Shout99 website found that 60% believed they fall outside IR35, 20% are not sure and the remaining 20% thought they were caught by the tax. ‘A year ago, that last figure would have been around 100%,’ White said.

White plans to add to the website information and advice to help freelancers be better informed, retain more of their earnings and move outside IR35.

Shout99 spokeswoman Susie Hughes said: ‘Contractors should be looking for a new strategy. They had a damn good attempt at fighting IR35 – but it is now a reality. IR35 is beatable not by fighting the government, but by looking at it commercially, giving contractors the best tools to beat it on an individual basis and resources to confidently challenge IR35.’

An attempt at a judicial review to have the rules outlawed failed more than a year ago. Although a few individual cases have successfully challenged the Inland Revenue there has been no significant breakthroughs or new legal precedents established which would help the contracting community as a whole.

The PCG was unavailable for comment at the time of going to press.

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