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Chronology
- March 9 1999 - The Budget Immediately following
Chancellor Gordon Brown's 1999 Budget, a series of Government
press notices were released to deal with the detail of
the proposals. The 35th press notice from the Inland Revenue
(IR35) announced the intention to introduce measures to
counter avoidance in the area of personal service provision.
The Chancellor cited the target group for this measure,
the so-called Friday-to-Monday workers who leave a company
on a Friday only to return to the same job on a Monday
as a self-employed contractor.
- March 13 1999 - Engineerjob.com Businessman
Andy White, who started as contractor and went on to build
several successful, larger businesses, thought that despite
the Government's claims to be targeting the 'Friday-to-Monday'
workers, they would spread their net much further and
target legitimate small businesses. He expressed his concerns
to a wider audience through an email newsletter and his
web-site www.engineerjob.com to see if others shared his
concern. Within two week, the site had received 40,000
hits.
- April 22 1999 - IR releases draft proposals.
The Inland Revenue releases its draft proposals relating
to IR35 and requested comments from interested parties.
It was then clear that the original concerns had been
well-founded as the target was now plainly any small businesses
which worked in the knowledge-based sector. The proposals
indicated that, unlike other businesses, total turnover
should be treated as salary for tax and NI purposes -
preventing expansion, investment or even allowing the
company to make a profit.
- May 4 1999 - PCG formed Following the response
to the engineerjob.com newsletter, 2000 contractors agree
to fund the start up of their own group to represent their
interests in IR35. And so the Professional Contractors
Group was formed.
- May 13 1999 - New clauses While the Revenue was
still receiving comments on its proposals, draft new clause
were tabled for inclusion in the Welfare Reform Bill giving
effect to the proposals.
- May 17 1999 - IR35 enters legislation The new
Clause giving effect to IR35 was voted through at Third
Reading of Welfare Reform Bill in the House of Commons
and was included in the legislation.
- May 21 1999 - Closing date for comments Several
days after the IR35 provisions had been put into a Parliamentary
Bill, came the closing date for comments to the Inland
Revenue on its draft proposals.
- May 21 1999 - Regulatory Impact Assessment The
Government's Regulatory Impact Assessment which examined
the effect of IR35 was published on a DSS website. It
showed that IR35 would close 66,000 small businesses and
gain the Revenue more than �400m.
- June 10/11 1999 - IR meetings A month after IR35
was introduced into Parliament, the Revenue held its first
consultation meetings with the interested parties, including
the Professional Contractors Group, about the draft proposals.
- June 10 1999 - Lords Second Reading Second Reading
of the Welfare Reform Bill in the House of Lords. The
subject was debated but in keeping with Parliamentary
convention there was no vote at this stage. However, there
was an indication from several Peers that they felt the
proposals were introduced without full consideration and
were damaging to small businesses.
- June 20 1999 (and other dates) - Lords Committee
Clause 70 debated in Committee Stage in the House of Lords.
The Government spokesman Lord McIntosh promises further
discussion in the summer with interested parties in return
for the Opposition Peers not pushing the matter to a vote.
- September 4 1999 - Financial Times Although the
Revenue had promised consultation during the summer, none
had been offered. Then the Financial Times reported that
there had been a series of secret meetings within the
Revenue and that it was about to announce its decision.
- September 22 1999 - IR calls meeting Perhaps
as a result of the concern over reports of 'secret meetings'
and 'decisions behind closed doors' the Revenue invited
several groups, including the PCG, to a meeting. During
that meeting the groups were told that Ministers had had
already reached a decision and an announcement would be
made shortly.
- September 23 1999 - Self employment tests The
day after the meeting with the various pressure groups,
the Revenue announced that, after 'consultation' it had
revised its proposals. The principle remained the same
but the test moved from the 'illogical' direction, supervision
and control - to the 'unworkable' self-employment tests.
The self-employment tests belonged to a pre-high tech
era and do not fit as a measure for evaluating a knowledge-based
business. As the PCG said at the time, it was like asking
someone to weigh something and providing them with a ruler
to do it.
- October 13 1999 - IR35 defeated in the Lords
When the Welfare Reform Bill returned to the House of
Lords at Third Reading, the Peers signalled their dissatisfaction
with the IR35 proposals and the manner of its introduction.
After a heated debate, the Lords rebelled against the
Government and voted Clause 70 - containing the IR35 provisions
- out of the legislation.
- October 27 1999 - PCG's RIA The PCG produced
its own Regulatory Impact Assessment, factoring in items
which had been omitted by the Revenue. When they took
into account loss of income from people who would move
overseas, losses in corporation tax, increased compliance
costs and other costs, the PCG found that IR35 would cost
the Revenue �700 million rather than the predicted �400
million gain.
- November 3 1999 - Contractor Wednesday Despite
the Lords removing the measure from the Welfare Reform
Bill, the Government indicated that it intended to use
its significant majority to reintroduce the clauses in
the Bill. The PCG organised 'Contractor Wednesday' and
invited any of its members to come to Parliament to discuss
their concerns with their MPs. More than 700 businessmen
and women arrived at the House of Commons to discuss their
concerns with their MPs.
- November 3 1999 - Commons reintroduce IR35 Despite
this show of concern and the fact that the Government's
backbenchers were deserted during the debate on the reintroduction
of IR35, the Government whipped the vote and IR35 was
back in the legislation.
- November 8 1999 - Back to House of Lords In
keeping with Parliamentary, the Lords, while continuing
to oppose the measure, did not remove it for a second
time and IR35 became law in the Welfare Reform and Pensions
Act 1999.
- November 12 1999 - IR release Draft Guidelines
Mid- Dec 1999- PCG has an unproductive meeting with Paymaster
General Dawn Primarolo.
- February 1 2000 - IR publishes guidelines - with
the opinion that standard agency contracts over a one
month duration would be within IR35.
- March 13 2000 - Finance Bill clauses The Inland
Revenue published the draft regulations and the clauses
on IR35 which would go into this year's Finance Bill.
- March 26 2000 - PCG's contract gets IR approval
April 6 2000 - Implementation Implementation of IR35 provision
- April 6 2000 - PCG launches Judicial Review
- May 17 2000 - Tax Faculty give three out of ten
The well-respected Tax Faculty of the ICAEW analyses IR35
and the manner it has been implemented and awards the
Government a poor three out of ten.
- July 7 2000 - Joint letter The Financial Times
publishes an open letter from the PCG, CBI and FSB criticising
IR35 and calling on the Government to rethink before it's
too late.
- July 28 2000 - Royal Assent Finance Bill receives
Royal Assent
- Summer 2000 - Fast track visas 'in' and IT contractors
'out' As a number of survey reveal that about 25 per cent
of IT contractors where considering leaving the country
because of IR35, the Government announced measures to
introduce fast-track visas for non-EU residents with IT
skills.
- October 10 2000- PCG wins permission in the High
Court to judicially review IR35.
- Jan 25 2001- PCG membership hits 11,000
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