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IR35 battle to hit the High Court

Graeme Wearden ZDNet.co.uk

Published: 09 Mar 2001 13:08 GMT

A group representing the UK's IT consultants will clash with the Inland Revenue in the High Court next Tuesday, in an attempt to overturn the government's controversial IR35 tax rules.

The Professional Contractors Group (PCG), which has secured a judicial review of the new tax, claims that IR35 is illegal under European law because it acts as a tax break for big IT agencies. IT35, which was introduced in April 2000, treats some self-employed IT contractors as employees. According to the PCG this could mean that a specialist IT contractor could be forced to pay a higher tax rate than a larger competitor -- 38 percent compared to 32 percent.

A three-day hearing is scheduled to begin at the High Court on Tuesday. The government's implementation of IR35 has already been attacked by the all-party Treasury Select Committee, which accused it of rushing the new measures through.

Last month, David Heathcote-Amory, shadow secretary of state for trade and industry, claimed that the government did not understand the IT industry and was treating it unfairly.

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