Update No.11 - The story so far ...

Friday 16th March 2001.

Since the court did not convene today it seems the perfect opportunity to provide a summary of the story so far, for what appears to have become a considerable readership of this PCG News Flash site.

So far the case has been heard over three days and it looks likely that another two will be required. This has been set for Monday the 19th and Tuesday the 20th March 2001. As previously regular in depth news will be placed on this page at the end of each session with news flashes being put up whenever we have relevant information available.

The PCG press office will be taking up further temporary residence at the Cheshire Cheese in Little Essex Street, very near to the high court. Journalists are invited to pop in at any time for an update of the proceedings and contractors from many disciplines will be on hand to give interviews.

Summary of Events.

The case started on Tuesday the 13th of March with Counsel for the PCG Gerald Barling QC representing their case. The Judge was naturally starting at or near ground zero and was further hampered by not receiving the mountains of evidence until the previous lunchtime. Thus the first session was taken up with an exchange between the two QC’s and Judge to clear up the Judges questions on the cases being presented by either side.

The rest of the session was taken up rehearsing points made in the skeleton arguments on both sides In depth reporting of this can be found in the archived updates linked in the side bar of this page. Updates 1 and 2.

The afternoon session was spent with Counsel for the PCG, outlining the expert evidence and affidavits of PCG Chairman Gareth Williams and other independent consultants. Much of the discussion centered around the PCG’s points on targeting, uncertainty and competition. More in depth information can be found in the archive in updates 3 and 4

Wednesday mornings Session centred on the anomalies that the legislation creates with regard to employment benefits such as SSP, SMP, Unemployment Benefit. In addition the factors of uncertainty and targeting were further explored. Many of the fundamental problems that contractors are discovering were covered in this session. This can be found in update 6.

The Wednesday afternoon session (update 7) was largely taken up with a highly technical discussion of case law. Only the short conclusions are recorded in update 7 for brevity, as this complex argument would run to many pages.

The Thursday morning session (update 9) was spent discussing the three main arguments and discussing the tax measures and their effect and the intention behind them. Much was said about intention. Was this a tax avoidance measure, a general tax measure and was the use of incorporation tax mitigation or tax avoidance? More discussion took place on the anomalies of deemed employees. Discussion centred around the possibility, that caught by IR35 means employment rights for the deemed employer and that in certain circumstances a “body shop” supplied consultant could be in a similar position with the end client.(see also update 8).

Thursday afternoon (Update 10) had a 14:30 guillotine on the PCG counsels time, although in the event it did run until just after this. The PCG had submitted additional evidence in the engineering sector. The ICAEW report was presented giving the legislation 0/10 for fairness and 0/10 for the effect on competition.

Counsel for the Revenue (Richard Plender QC) rose at 14:40 and stated that IR35 was “generous”. Discussion centered on training costs, penalties (and the April Deadline), and the PCG evidence of the contract that had been assessed as both caught and not caught by the Revenue. Later, Revenue Counsel attempted to claim that the contract was irrelevant and that it was the reality that counted. Revenue Counsel agreed that the revenue was required to construct the “imaginary contract” from the contract chain. Revenue counsel returned to the Lunn Polly case and to some of the PCG evidence (the Peacock case). Revenue counsel said the PCG had welcomed the “extensive” changes that were made to IR35 as a result of the “consultation”.

The session concluded with all parties agreeing that the case would probably run over into the Tuesday of next week (Tuesday 20th March.)