PracticeConsultingNew PCG outrage over contractors’ tax status

New PCG outrage over contractors' tax status

The Professional Contractors Group, which lobbied unsuccessfully to get the controversial IR35 rule scrapped, now claims the Inland Revenue is again unfairly targeting contractors and their wives.

Link: PCG founder finally admits IR35 defeat

According to the dogged campaigner, the Revenue’s interpretation of Section 660, an existing tax rule, means that many independent freelancers will be shunted into a higher tax bracket and hence pay more tax.

It says the Revenue will rule that a spouse of a contractor cannot be the beneficiary of dividends paid out by the contractor’s own corporation, but must be paid to the principle earner.

A common arrangement amongst contractors has been to pay out dividends to the spouse ‘who carries out administrative work for the business’.

David Ramsden, co-found of the PCG, called the interpretation ‘an attack on small business’ and attack on ‘women’s right to hold shares’.

The PCG is calling on paymaster general Dawn Primarolo to intervene ‘as a matter of urgency’ and says it has the support of the Federation of Small Business and tax experts.

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