The Professional Contractors Group (PCG) yesterday began its
appeal against the Government in the English Court of Appeal. It is
hoping to prove that IR35, the controversial tax on small,
knowledge-based businesses, is illegal under European law.
The Appeal, which has been funded by the membership of the PCG,
which was set up in 1999 to lobby against the tax, will claim that
IR35 contravenes European legislation on two counts - illegal state
aid and a barrier to free movement - and therefore should be
removed from the UK’s statute books.
IR35 was announced after the March 1999 Budget. It treats small
businesses in the knowledge-based sector as “disguised employees”
for tax and National Insurance purposes, which, argues the PCG,
prevents them from operating on similar terms to their larger
competitors.
The original judicial review was held in the High Court in March
this year. On 2nd April, Mr Justice Burton found against the PCG on
the points of law and denied the claim, although he found in the
PCG’s favour on all findings of fact and was critical of the Inland
Revenue's approach to the legislation.
PCG's Chairman, Jane Akshar, said: "The High Court found in
PCG's favour on so many factual issues that we felt it was only a
small step to prove that not only is this law unfair and
uncompetitive it is also illegal."
