DETAILS OF PCG'S LATEST IR35 VICTORY PUBLISHED

The full judgment in the latest IR35 win for PCG at the Special Commissioners, that of Mike Ansell, is now available on PCG's website. Ansell was a very "typical" contractor in terms of set-up and arrangements and the result is good news for many thousands of others whose circumstances and contracts are very similar.

Ansell's case was presented by Dave Smith of Accountax Consulting, still the only consultancy ever to have won IR35 cases at this level. An analysis of the result and what it means for all freelancers can also be found on PCG's website.

TAX BODIES CALL FOR NEW STATUS RULES TO REPLACE IR35

A discussion paper entitled "Small business issues - Paragraph 5.95 of the Budget 2004 Red Book" has been prepared by the Tax Faculty with assistance from the Chartered Institute of Taxation. It is intended to contribute to the debate on the tax treatment of small businesses.

The paper points to the lack of available data to support the Government's estimate of £900 million at risk in the absence of the measures, and a similar lack of data on the administrative and employment costs arising from IR35 investigations, begging the question "whether the tax raised by IR35 has fallen far short of its intended target".

The paper concludes that "the IR35 rules are fundamentally flawed. If they are intended to raise revenue it appears that this objective is not being achieved in practice and certainly there are no statistics to show that this has been the case."

It also addresses Section 660A, the settlements legislation, and suggests that "for smaller tax enterprises, such as husband and wife companies, the Government should take a pragmatic view in applying the settlements legislation."

PREFERENTIAL MEMBER DISCOUNT ON IR35 BOOK

The third edition of Dave Smith's IR35 book is due out in a few weeks. The cover price is £54.95 but there will be a 50% discount for PCG members. More details will follow once the book has been released.

ANNE REDSTON ON THE ARCTIC SYSTEMS CASE

Leading tax expert and partner at accountancy firm Ernst & Young, Anne Redston, has written an article outlining three possible outcomes from the Arctic Systems case. In it she describes how the many S660A cases that she has seen fall into three categories, with slightly more cases relating to subscribed shares.

The Arctic Systems case was heard by the Special Commissioners in mid-June, and judgment should be imminent.

MAINTAINING MEMBERSHIP AFTER BUSINESS CLOSURE

Abbey Tax has provided the following advice about the likely period of time for which PCG membership should be maintained after a business closure:

Essentially the Revenue can enquire into the final accounts of a company for up to two years after the company ceases trading. I will illustrate the procedure using a company, ABC Ltd, with a 31 December 2004 year end.

The company ceases trading on 31 December 2004. The final accounts and final Corporation Tax Self Assessment Return must be submitted to the Revenue by 31 December 2005. The Revenue has until 31 December 2006 to enquire into that return (i.e. the "enquiry window" closes).

Thereafter the Revenue cannot make any further enquiries unless a "discovery" is made at a later date. A discovery is a matter that the Revenue subsequently becomes aware of, that would materially affect the previously declared tax position of ABC Ltd.

An example of this might be that a Revenue enquiry into a business which had engaged ABC Ltd showed that ABC Ltd had been paid £100,000 for services provided and not the £50,000 shown in ABC Ltd's accounts. As such a scenario would be both extremely rare and unlikely to be covered by any form of insurance because it would most likely be deemed fraudulent, there is no need to go beyond the two year period that ends with the Revenue's enquiry window closing.

Therefore the member will need to keep his/her membership in place to cover the two-year enquiry window to ensure that PEI is in place and would have to pay for Route35 to cover the same period.

PCG TEAMS UP WITH PENDRAGON FOR BYTE NIGHT 2004

On Friday 17 September 2004, Maxine Preston-Allen, managing director of PCG Affiliate member Pendragon, CC member Andrew Banks and PCG director Richard Robson will be braving the elements to join other hardy souls sleeping rough for the night to raise money for NCH, the children's charity. Last year, over 160 senior IT executives took part in Byte Night, and the event has so far raised over a million pounds for NCH's work with young homeless people and care leavers.

NCH helps children and young people facing difficulties or challenges in their lives, and it works with more children and young people, including those affected by poverty, disability and abuse, than any other UK charity.

Byte Night will take place at Potters Field, adjacent to City Hall, The Queen's Walk, London SE1 2AA. Actress Jenny Agutter, of The Railway Children fame, has supported Byte Night since its first year and will join the sleepers in London.

This will be the second time that PCG has participated in the event. Richard said, "Byte Night is a fantastic way of raising money for a worthwhile cause, and the three of us are keen that our efforts should not shamed in such company; we would greatly appreciate your support."

You can make a donation or a pledge at https://www.bmycharity.com/V2/pendragon.

A local PCG group for Warrington. PCG member Andy Beesley has this message: Julie Stewart, PCG Director responsible for Regions, informs me that there are at least 18 PCG members in the Warrington area. I think it would be good to form a small local PCG group to support each other in collaborative commercial opportunities and anything else we consider appropriate. If you think the same and your business is in the Warrington area then please e-mail me at [email protected].

Various members have also posted in the RLM forum about potential meetings in Sheffield, Norwich, Edinburgh, Shropshire and South Wales. If you would like to attend RLMs in any of these areas, please register your interest by posting to the relevant thread.

OTHER EVENTS

AICS, London - Thursday 30 September 2004 18:45

Guest speaker Scott Childes of Royal Mail will talk about address data management, explaining the finer points of addresses and postcodes and talking about some of the address data products available from the Royal Mail to developers of IS/IT systems.

Professional Contractors Group Limited
Lakeside House, 1 Furzeground Way
Stockley Park East
Uxbridge
UB11 1BD

Telephone: +44 (0845) 125 9899
Fax: +44 (020) 8622 3200

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