PCG calls on Government to stop unfair IR35
The Professional Contractors Group has issued an 11th hour 59th minute call on the Government to abandon its controversial IR35 proposal following evidence in UKTECH that large foreign-owned companies are using the proposal to gain a tax advantage over their smaller UK competitors.
It is well-known that the UK Government is introducing 'fast track visas' for Indian, East European and other overseas IT specialists to meet the skills shortage in this country.
However, UKTECH revealed that some large foreign owned companies are employing these workers on low salaries then 'renting' them to clients for highly inflated fees.
Small companies are disadvantaged because while the big companies are allowed to treat the difference as a pre-tax profit which may then be invested back into the business; small UK consultants who are selling their own knowledge in the same way, are forced to treat their profit as if it was salary and are specifically prevented from reinvesting in or developing their businesses on equal terms with their large competitors. They must also pay for their training and most expenses out of taxed income.
Gareth Williams, Chairman of the Professional Contractors Group which represents the interests of independent contractors, said: "The Government has a last opportunity to reconsider this divisive and unfair legislation. The Treasury is promoting legislation which encourages large foreign owned companies to pay low wages to workers from overseas; then gives them a corporate tax break which, in the Government's own estimate, will put tens of thousands UK enterpreneurs out of business."
Several organisations, including the two leading accountancy bodies, trade associations and industry representatives have recently called on the Government to re-think this measure. However, the Paymaster General, Dawn Primarolo, is currently driving it through Parliament in the Finance Bill.
Gareth Williams concluded: "The Prime Minister has made claims to support enterprise, information technology and small business yet his Ministers are destroying them. If he means what he says - and to prove it's not just more empty words - he should reconsider this proposal."