Contractors take IR35 challenge to UK High Court

The Professional Contractors Group (PCG) has raised half a million pounds to fund a legal challenge to the UK government in the High Court this week, over its IR35 legislation.

IR35 closes what the government claimed was a tax loophole being used by IT contractors who set up as one-person limited companies to avoid paying full levels of tax and National Insurance contributions.

The PCG has raised the fighting fund from its members and is confident it will succeed.

Jane Akshar, director of the PCG, told silicon.com: "We, like a lot of other big organisations such as the chartered accountants, have said that IR35 is unfair. We feel it is so unfair that our members have banded together and are funding a judicial review that will hopefully get this stupid and draconian law chucked out."

The PCG's legal council, Gerald Barling QC, was responsible for having the ban on Sunday trading in the UK lifted under EU law. Barling will argue that the government has again contravened EU law in the way that IR35 was drawn up.

The UK government has been issued with a letter of intent but said it would not back down.

David Ramsden, also a director of the PCG, explained: "The last of the witness statements have been returned and the main evidences have been sworn. These papers will go to the High Court this week where we hope to get a hearing. After which, the court will decide if leave should be given."

He added confidently: "We have a strong case."

However, Nick Cotter lawyer at Jones Day, believes the PCG is facing an uphill struggle. "To challenge an Act of parliament is very difficult. They have a number of hurdles to overcome just to get permission to proceed - they have to show they have an arguable case." He added that even if the High Court finds in PCG's favour, it would be very difficult to have the legislation quashed.

IR35 came into effect on 6 April this year, despite strong opposition.

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