PCG attacks consultancies cashing in on IR35 confusion

Article appeared on Silicon.com web site.

Text of article;

Lobby groups representing IT contractors have attacked private consultancy firms for cashing in on the confusion created by IR35 - and again attacked the UK government for the uncertainty and unfairness surrounding the law.

IR35, the Treasury rule which taxes contractors as if they were permanent employees, but denies them standard benefits, is set for a judicial review on 15 March.

Contractor consultancy, eVirtualCompany, which officially launches on 16 February, is marketing itself as a solution to IR35. The firm is the latest in a growing list of consultants that charge contractors a fee in return for handling their new IR35 tax requirements.

But the Professional Contractors Group - one of the most vocal opponents to the IR35 law - criticised this trend. Spokeswoman, Suzi Hughes claimed companies like eVirtualCompany are trading on the confusion experienced by many contractors in the aftermath of IR35.

Hughes said: "People will set up companies and make money. Some will be unscrupulous. But the fault does not lie with these companies, but with the government which allows this uncertainty and allows people to capitalise on it."

eVirtualCompany MD, Robert Godlonton, defended the company's role, saying the original idea was to help IT contractors - not to take advantage of legal loopholes. "We fully comply with IR35. What we do is enable contractors to process their National Insurance and PAYE as efficiently as possible. We are supported by the Inland Revenue. We're not exploiting any loopholes," he said.

But Godlonton admitted that the concept behind the company has changed. He said eVirtualCompany will now gear itself more towards IR35 issues, offering all the services of full-time employment combined with the flexibility of freelancing.

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David Hopkins

Webtastic Ltd