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Contractor group calls on Chancellor to repeal IR35

Published on Apr 7, 2009 |

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The PCG has called on the Chancellor to abolish IR35, and other barriers to contracting, in the forthcoming Budget.

Repeal IR35

In its submission to Budget 2009, the contractors' organisation said that IR35 was the largest single impediment to contract working in the UK, and that it should be repealed as a matter of urgency.

The PCG says that IR35 not only creates massive uncertainty for contract and freelance workers, but there is no evidence that the Treasury actually raises any money from the much-hated tax measure.

Contractors needed for the recovery

Chris Bryce, PCG chairman, said that contractors have an essential role to play in the UK's economic recovery:

"The flexibility, skill, and knowledge they provide will be instrumental in meeting the needs of businesses, generating future wealth for the economy. Therefore the tax and regulatory burdens upon them must be removed.

S44-7 Tax Rules

Alongside its call to repeal IR35, the submission also calls for the VAT staff hire concession abolition to be reversed, and for the abolition of the "S44-7" tax rules.

S44-47 ITEPA 2003 obliges workers using employment agencies to take payment as employment income, thus encouraging self-employed workers to incorporate.

The PCG says that "S44-7 makes it impossible in practice for agencies to pay freelancers gross unless they have a corporate form, thus limiting the choice of legal form available to them."