PCG welcomes Conservative's commitment to repeal IR35

The Professional Contractors Group welcomed the Conservative Party's commitment to repeal the stealth tax IR35. David Heathcoat-Amory, Shadow Secretary of State for the Department of Trade and Industry announced that they would repeal the legislation, hold consultations and introduce measures which specifically targeted any abuses which might exist.

Chairman of the PCG, Gareth Williams, said: "The Conservative Party is committing to do what the Government has failed to do - that is to consult with interested parties, understand the problem and then introduce appropriate legislation.

"In contrast IR35 was based on a flawed understanding of the modern economy, was badly drafted, hastily introduced, and targets tens of thousands of legitimate small businesses.

"Perhaps if the Government had followed the terms of its own Better Regulation Guide, it would have realised that the effect of its legislation is to close businesses and drive entrepreneurs to other countries where their cutting-edge skills are in great demand.

"All we have ever asked for is that the Government should carry out a full and proper consultation, to determine the extent of any problem and to ensure legitimate businesses are not affected. It is encouraging that the Conservatives have recognised the damage IR35 is causing to small businesses and are prepared to listen and consider the situation before they act.

"PCG’s members have been disappointed by the response of Labour MPs, who usually do no more than act as a post-box for the standard letters generated by the Paymaster General.

"In the meantime, the Government seems happy to preside over the demise of the small knowledge-based businesses, while protecting the 'fat cat' large consultancies from the impact of this legislation."

IR35 was announced in a press notice after the March 1999 Budget. It treats small businesses in the knowledge-based sector as ‘disguised employees’ for tax and NI purposes, thereby preventing them from operating on similar terms to their larger competitors.