Contractors to battle against IR35

Anti-IR35 campaigners are to take their battle against the Inland Revenue to the Court of Appeal in an effort to have the controversial IR35 tax rules abolished.

The Professional Contractors Group, which mainly represents IT and engineering workers, said it would challenge the decision made in April 2001 after a judicial review at the High Court.

IR35 removes many of the tax advantages previously held by contractors operating through one-person companies.

But the PCG says IR35 discriminates against larger businesses and is illegal under European law.

Jane Akshar, chairman of the PCG, said: “Our members decided to fund an appeal against the High Court decision because we believe we have a good case and we want to fight for our right to run small businesses.

“These people are hard-working businessmen and women whose businesses are being damaged and, in some cases, destroyed because of unfair treatment by the government.

“IR35 treats these entrepreneurs as if they are employees for tax and NI purposes, and therefore prevents them from competing on a level playing field with their larger competitors.”

At the review in March, judge Mr Justice Burton dismissed the PCG’s application, saying IR35 could not be challenged on European grounds.

It was thought that a lack of funding might hinder the PCG’s progress and in June the group went back to its members to decide whether or not to continue the action.

But evidently members feel the fight is worth pursuing, as the appeal case is likely to cost as much as the High Court battle in March.

A spokesman for the Revenue told Accountancy Age it would “strongly contest the PCG’s appeal”.

First payments under IR35 regulations were due on 19 April.

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