How to become an IT Contractor - Becoming an IT Contractor

The leading representative body for contractors and freelancers, the Professional Contractors Group (PCG), is celebrating its ten year anniversary next month.

In its first decade, the body has fought hard to protect contractors from successive waves of tax legislation and government regulations.

Best known for its tenacious opposition to IR35, we look at some of the other campaigns the group has been involved in since 1999:

Arctic Systems Case

The PCG supported Geoff and Diana Jones of Arctic Systems Ltd after HMRC tried to reinterpret the Section 660 tax laws to penalise 'husband and wife' businesses. HMRC lost each legal hearing - and even had its reinterpretation of the rules booted out by the House of Lords...

Income Shifting

Following its failure in the Arctic Systems case, the Government almost immediately launched a new campaign against family-run businesses, known as the 'income shifting' rules. The legislation was first delayed in Budget 2008, and then more or less abandoned in the November 2008 Pre-Budget Report

Umbrella Company Expenses

The PCG was involved in the Government consultation on umbrella company expenses, after some companies were suspected of abusing their 'expense dispensations'. The group said that expense rules should be enforced fairly and universally without singling out one single set of workers (in this case, freelancers).

Skills 'Shortages'

The PCG was instrumental in removing all IT disciplines from the skills shortage list in the early 2000's after large companies used the alleged existence of a shortage in IT skills as an excuse to import thousands of overseas workers on low wages.

IR35

The PCG was started in response after the Government announced the proposed IR35 tax legislation in 1999, and has fought against IR35 ever since. Despite losing a judicial review against the IR35 measure, the group's subsequent case strategy has established as much clarity in case law as is possible.

Other measures

The PCG has also been involved in a number of other important areas, including:

- In 2007 PCG secured re-written official guidance from the Cabinet Office, stating clearly that public sector end-clients should not insist on pre-existing security clearance for work on client sites, in light of a substantial body of evidence for this damaging practice amassed by PCG members.

- PCG secured an opt-out for workers who use limited companies from the Conduct of Employment Agencies and Employment Business Regulations 2003, which were intended to protect vulnerable workers and not aimed at skilled freelance professionals.

- In 2006 the European Commission published a Green Paper on Labour Law which demonstrated a deeply poor understanding of freelancing and could well have led to harmful new legislation. PCG campaigned in Brussels with other UK business organisations and the Green Paper was subsequently taken no further by the EU.

- A long-running EU proposal threatened to make software patentable; this would have made software development impossible for most independent contractors who did not have access to patent portfolios to trade with. PCG was the only UK organisation to campaign against this proposal in Brussels in 2005, and the directive was rejected at Second Reading by the European Parliament - the only time this has ever happened.

- PCG has been heavily involved with the development of the new points-based system for managing migration.

- The Government's decision in 2006 to clamp down on the tax advantage offered by "managed service companies" ("composite companies") created a danger of contractors who use limited companies being caught by the measure accidentally. PCG worked closely with the Government to secure a tight definition that did not catch non-MSC freelancers.

- When the Government consulted on re-designing the AMAPs system, PCG argued that the existing regime was workable and generally-understood, and should be retained. The Government's final decision was indeed to retain it.

- Successfully campaigned against the worst dangers posed by the merger of the old Inland Revenue and HMRC in 2005.