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The Professional Contractors Group (PCG)is off to the High Court today to seek a judicial review of IR35, a new tax law which severely curtails the self-employment status of its IT consultant members.

The PCG argues that IR35 contravenes the European Convention of Human Rights as it is a "de facto confiscation of property".

Furthermore, IR35 is "illegal state aid as the Government is taxing small contractors more harshly than their larger competitors".

IR35 is also a "breach of the right of establishment as it discourages contractors from trading in the UK".

Ninety thousand people have been affected by IR35, according to Inland Revenue estimates, cited by the FT. The Inland Revenue reckons that it will claw an extra £350 million from this constituency of self-employed consultants who - it argues - have avoided tax by sheltering under one-person companies, when they were, in effect de facto employees of the companies they were working for.

The Inland Revenue contrasts the 21 per cent in tax and National Insurance contributions on an income of £50,000 typically paid by the consultant operating a one-man business with the 35 per cent stumped up by an employee on an equivalent salary.

The PCG says this is comparing chalk with cheese - as consultants do not receive employee benefits for the companies they work for.

The PCG's background briefing document is available at:
www.shout99.com. ®

Related stories

CBI, FSB, PCG ask for rethink on IR35
Contractors raise £500K for IR35 court challenge

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