Contractor group slams Chancellor over IR35

The Professional Contractors Group (PCG) has welcomed Chancellor Gordon Brown's plans to extend flexible VAT payment options to more small businesses, as announced in his pre-budget report yesterday.

However, the PCG said that it was "disappointed" that no provision was made to help self-employed workers struggling to cope with the government's controversial IR35 regulations.

PCG chairman Simon Juden said that he agreed with the Chancellor's assertion that the UK can be a world leader by "combining our enterprise with investment in skills".

However, Juden added: "We are disappointed that the Chancellor continues to ignore the one in seven workers in the UK who choose to work for themselves.

"The UK's freelance consultants and contractors offer the economy a highly skilled and flexible resource, and have an important role to play in fulfilling Mr Brown's vision of equipping Britain for the global economy, and yet his statement today offered them little."

Juden went on to argue that the pre-budget provisions are "unfortunately undermined" by the government's previous measures.

"Contractors deemed to operate within the IR35 intermediaries' legislation have to fund their training from post-tax revenue, unlike the larger consultancies with which they compete," he said.

"Likewise, we are pleased to hear about the savings made following the Gershon report, but we would like to see public sector procurement being opened further to smaller, independent consultants to offer enhanced competition and efficiency."

The PCG recently wrote to the Paymaster General asking whether the govern ment was planning to review the criteria for launching IR35 investigations.

This was prompted by the PCG's analysis showing that, of 1,164 investigations, only three had resulted in the contractor being found in contravention of the IR35 rules.

"Apart from the terrible toll that these investigations take on the contractors, their families and their business relationships, we are concerned about the cost to taxpayers of funding so many lengthy and fruitless investigations," said Juden.

"We had hoped that the Chancellor would take the opportunity to announce a long-overdue review of whether IR35 has served any useful purpose."

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