Issue 14; 29 June 1999

Joint Statement | PCG Member meets Gordon Brown

Following a meeting held on 23 June 1999 it was decided to draft a joint statement from those organisations whose members were most directly affected by IR 35. This is the full text of that statement.
It is also available for down load as a PDF file(14 KB) - Statement

Joint submission to the Inland Revenue from: Federation of Small Businesses (FSB), Professional Contractors Group (PCG), Independent Computer Contractors (ICC) and the Association of Temporary & Interim Executive Services (ATIES)

Reference: Recent meetings held on 10th and 11th June 1999 at the Inland Revenue, concerning proposals to change the fiscal regime for small businesses. Announced in press release IR 35.

We are writing as organisations who represent many of the businesses who find themselves at the "sharp end" of the legislation proposed by IR 35. We believe that our position to the present proposals was made clear at the meetings on 10 and 11 June. They are, in our view, unduly complicated, unworkable and disproportionate to the problem as outlined in the Press statement; IR 35. Furthermore the potential economic and political consequences will be far greater than suggested by the Regulatory Impact Assessment

We believe the proposed "control" test for "disguised employment" is unreasonable and that it fails to take account of the realities of the modern knowledge based economy: it would result in real small businesses ( many of them with ambition to be large businesses) being arbitrarily treated as if they were merely devices for tax avoidance. These companies, especially in the IT and engineering field, are an important engine of economic growth and it is surely counter to Government policy to discourage them, as this measure would do.

We should point out that adoption of such a narrow test would in fact change the definition of employment/self employment and contradict the statement in IR 35 "There is no intention to redefine the existing boundary between employment and self-employment."

As such, a disproportionate number of small businesses, who do consider themselves engaged in "genuine entrepreneurial activity" will be disadvantaged when compared to their larger Competitors. We understand from the meetings that these changes have been Lobbied for and note a recent article in the Times (24 June) which states, when discussing the background to this issue "Nor does it go down well with the large IT consultancies such as EDS, for example. It was organisations such as these that first alerted the Government to what they perceived as a problem. They felt that if they could break up the tax advantages that individual consultants had it might bring down what they saw as the exorbitant rates charged by them"

We support the objective of IR 35 to achieve "a tax system under which everyone pays their fair share" and would support and assist in developing targeted and proportionate measures to tackle abuse of the existing system, however there is a growing concern that measures to target such abuse are being used by larger Companies, often with strong Government connections, to drive smaller competitors out of business.

When this is coupled with the last minute amendment to the Welfare Reform Bill we are sure it will be appreciated that Government stating we are engaged in "genuine consultation" is treated with some suspicion. We already note that the bill, which refers to a "Certification" scheme, would now appear to be contradicted by statements at the Revenue meetings that this should now be called "Registration"

We would ask that the Government engage in a proper consultative process to ensure targeted and proportionate measures are taken to meet the objectives set out in IR 35.

Approved on 28th June 1999
Andrew White: Professional Contractors Group (PCG)
John Whiting: Association of Temporary & Interim Executive Services (ATIES)
Mike Cullen: Independent Computer Contractors (ICC)
Simon Sweetman: Federation of Small Businesses (FSB)

PCG member meets Gordon Brown
Last Friday one our members had the chance to put our case to the Chancellor. His report on our members discussion forums has given further impetus for other members to contact key members of the Government. We continue to hammer home our fundamental message: We are genuine businesses, not in disguised employment and should be treated the same as any other business, big or small. For those Contractors who consider themselves genuinely entrepreneurial, and want to have some influence on the proposed legislation, then now is the time to join the PCG. Decisions are being taken in the next 6 weeks which will affect your livelihoods and as you will discover from the members site, you can make a difference. For the others, then we understand that some Accountants are running a 3 hour seminar in November which will cost you 95 pounds. Our members, having had the benefit of being right at the coal face on this, will be positioning themselves at this time, to take advantage of the biggest change to hit Contracting for the last 20 years.

Kind Regards
Andy White
Professional Contractors Group
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Make a difference @: http://www.ir35update.co.uk
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