The Professional Contractors Group (PCG) has claimed a partial victory in its ongoing battle against controversial tax regulation IR35, after the Inland Revenue amended the official guidance on status assessment for tax inspectors.
The Revenue's internal Employment Status Manuals now take into account changes recommended by the PCG including clarification of duration of contract, provision of equipment and the relevance of indicators of 'Being in Business on Your Own Account'.
At the same time, the 'fail IR35 letter' has been substantially amended to make the explanation to the contractor more personal to his or her circumstances.
The Revenue has also recognised that a contractor can work for a single client for good business reasons and that this does not of itself mean that he or she is affected by IR35.
PCG chairman Jane Akshar gave a cautious welcome to the moves. "These changes have been a long time coming and they certainly haven't addressed all of our serious concerns, but they are a move in the right direction and we are pleased that our negotiations are yielding positive results," she said.
PCG spokeswoman Susie Hughes indicated that the revised manuals would give added clarity to contractors about their tax status, although she said that the 'victory' was unlikely to result in fewer contractors falling under IR35.
"Most of our members are pretty well versed in whether they're in or outside of IR35, and this is something more concrete for them to speak to inspectors about," she explained.
"The Revenue has been very willing to listen to our suggestions and clarify the situation," she added. "We're still a long way from a perfect situation, but this is certainly a step in the right direction."
The PCG will continue its focus on pushing through case law, she added.
The manuals are the guidebooks for the Revenue's own staff as to the criteria which are taken into account when determining whether a contractor is subject to IR35.
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