Rumours of mass exodus among contractors following the IR35 tax reform are overstated, writes Steven Mathieson. According to research for Computing and Computer Contractor magazines, fewer than one-fifth of contractors in single-person service companies plan to become tax exiles by moving abroad to avoid the horrors of the IR35 tax reforms. This compares with a third, in a survey by freelance lobby body the Professional Contractors Group (PCG), and one half in a survey for recruiter DPP International. The Computing and Computer Contractor survey finds the most popular option is a rate hike. As one contractor put it, freelancers are just as likely to 'shrug and get on with it' and 'stay but change the way I vote' as they are to move abroad to exploit less stringent taxation. Mike Cullen, chairman of the British Computer Society's contractor division, said that he knows of many freelancers who have decided to move abroad, mainly to Holland, because major tax breaks are available to them. 'They've had enough,' he said. However, such a move is more likely among older, more experienced contractors - partly as they will find it tougher to break back into permanent employment in an ageist industry, Cullen added. 'This government has bottled out of outlawing ageism,' said Cullen. 'Older contractors don't really have an option, thanks to that.' The survey finds that a majority of contractors think the government will raise more tax through IR35, despite claims from the PCG that emigration will mean a net loss. And - perhaps unsurprisingly - four fifths insisted the government has handled the issue very badly. The complete research will be published in Computing and Computer Contractor in a few weeks' time. The senior civil servant responsible for IR35 last week dismissed claims from the PCG that it was frozen out of policy consultations. 'They came to meetings in June, there was correspondence, they talked to us on the phone, and they met us in September,' said the Inland Revenue's assistant director of personal taxation Sarah Walker. She admitted the PCG didn't get what it wanted, but said that did not mean it hadn't been consulted.
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