The Professional Contractors Group (PCG), which was formed to
campaign against the IR35 tax on independent contractors, will
between tomorrow and Thursday argue before the High Court in London
that the controversial tax should be lifted.
The case, which has been funded by the membership of the PCG,
will claim that IR35 contravenes European legislation on three
counts and therefore should be abolished.
The PCG's case is that:
- IR35 is an illegal provision of state aid to larger
competitors;
- IR35 is in breach of the fundamental EC right - known as the
right of establishment - in so much that IR35 discourages EU
knowledge based contractors from trading;
- IR35 is in breach of the fundamental right protected by the
European Convention on Human Rights in that it amounts to a
confiscation of property.
The PCG says IR35 means that many small companies, mainly in IT
and engineering, are unable to operate on equal terms with their
larger competitors since their turnover is treated as salary for
tax and National Insurance Contribution (NIC) purposes. They are
therefore, says the PCG, unable to make or retain profits, unable
to allow business expenses such as training and equipment against
tax and cannot invest for the future or plan to grow or
develop.
The government says that IR35 was a necessary introduction to
close a loophole that allowed some people to avoid paying tax and
NICs by operating through a personal service company.
