Shadow chancellor Michael Portillo is backing IT contractors to the hilt and has said a Tory government would repeal IR35 tax legislation - the controversial rule to reclassify most self-employed IT consultants as employees,

In a column he penned for the FT he said: "Gordon Brown's proposals show a lack of understanding of the knowledge-based economy. This tax will clobber bright mobile young people, who can easily fly off to find work elsewhere where taxes are less punitive. As a result, Britain's competitive advantage in the IT sector is being put at risk.

On Monday, the High Court ruled that IR35 will stay in place, following an application from the Professional Contractors Group which claimed the law breached EU Human Rights legislation.

But the judge leading the review, Mr. Justice Burton was critical of the Inland Revenue, ruling the government had failed to enforce IR35 correctly. Furthermore he agreed with the argument of the Professional Contractors Group (PCG), which brought the case to the High Court, that the IR35 tests to determine tax liability were not applicable to the "knowledge-based sector", as the PCG refers to it. ®

Related Link

Michael Portillo's FT column

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