Thousands of entrepreneurs could have the chance to reclaim money taken from them under the controversial IR35 tax, a consultancy firm has claimed.

Qdos Consulting said that small businesses and freelancers who paid the "stealth tax’ soon after it was introduced in 1999 could be in line for a rebate because they handed over too much.

The government introduced IR35 to clampdown on tax avoidance by freelancers by charging them the same rate of National Insurance as normal employees.

However, small firms have bitterly opposed the tax, claiming that it does little to prevent avoidance and has threatened the viability of many enterprises.

Qdos said that in the early days of IR35, many freelancers decided to "tick the box and pay up". As a result, the consultancy said that many taxpayers paid out too much because they feared the Inland Revenue would class them as "disguised employees" rather than a legitimate small business.

Since the introduction of IR35, several small firms have won disputes with the Inland Revenue over the tax, raising hopes that thousands of businesses could be due a rebate.

Alongside freelance network Shout 99, Qdos has launched a new service, Out of the Box, which shows freelancers whether they have paid too much under IR35.

Steve Grenwell, of Qdos, said: "The level of uncertainty surrounding the introduction of IR35 was so great that many small businesses ‘ticked the box’ on the Revenue forms and paid up - rather than face the prospect of what seemed a lengthy and uncertain battle with the Revenue.

"As the situation has clarified, many people might regret those decisions which could have resulted in hundreds of thousands of pounds being handed over to the Revenue when it was not necessary.

"This new service gives those businesses a second chance to have their situation reviewed with a greater level of certainty."

Susie Hughes, managing director of Shout 99, said that she knew that many freelancers paid the IR35 tax when they were unsure of the situation: "This gives them an opportunity to look again at whether or not they should have, with the wisdom and experience of hindsight."

To find out more about the Out of the Box service, call Qdos on 01455 852030.

Copyright © 2004,