IR35 decision due next Monday
Published: 27 Mar 2001 08:20 BST
Judgement in the IR35 judicial review will be handed down on Monday, 2 April at the High Court.
The judgement on the controversial tax measure will be watched with interest by contractors and employers across the UK. The IR35 tax rule, which came into effect in April 2000, treats contractors working for large companies as employees. Independent contractors argue that this stops them receiving the tax benefits enjoyed by larger firm doing the same work.
The judicial review was heard at the High Court by Mr Justice Burton, and concluded on Tuesday 20 March. It was brought by the Professional Contractor Group (PCG), which represents the UK's self-employed contract workers. The PCG claims that the government's IR35 tax rules are illegal, because they give big businesses an illegal tax incentive, and will drive thousands of IT workers abroad.
The Inland Revenue, however, claims that IR35 is designed to clamp down on tax-avoidance, and that genuine businesses are not affected.
During the hearing, the judge warned the PCG that it had only presented a case for IT workers, not all contractors. Experts believe that there would be chaos if Justice Burton ruled that only IT contractors should be exempt from IR35. The judge also suggested that contractors who are treated as employees by IR35 deserve to get the same benefits, which could cost UK businesses up to £2bn a year.
COMMENT
Closing the loopholes in IR35
The laws to discourage tax dodging, should not go so far that they make it better for people to leave the country and work offshore. Guy Kewney isn't sure whether abandoning IR35 altogether is the answer -- but it certainly needs some serious tidying up.
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