Contractors at loggerheads with recruiters over 'false' IR35 claims

The PCG claims some recruitment companies are guilty of 'misleading advertising', but has pinpointed Computer People as a prime offender by submitting an official complaint to the Advertising Standards Authority (ASA).

In the complaint, the lobby group draws attention to a four-page document from Computer People, entitled The risk of direct contractors.

It contains the words "legislative changes in Employment Law and The Finance Act" and contains a paragraph about the Inland Revenue, but stops short of specifically mentioning either the European Working Time Directive or IR35 at any point.

The PCG, which has been one of the most vocal opponents of IR35, said in a statement that, "Computer People is now using as a 'sales pitch' a claim that if clients put an agent between themselves and the contractor, there is no risk of employment rights. However, the PCG believes the use of an agent has no bearing on this."

Peter Searle, MD of Computer People, fiercely denied the claim. "I am not using IR35 legislation to scare customers into using an agent," he said.

Searle alleged the PCG is persecuting both him and his company out of an ill-founded grudge. "The PCG has got it in for me," he said. "They hate us."

He maintained that the document concerned had only been used in a pitch to one client, answering a specific query about European legislation. "It's a major storm in a teacup", he added. "Only four contractors have taken themselves off our books because of this."

The Advertising Standards Authority has yet to log the complaint, and was not prepared to comment on the situation.

Earlier this month the PCG slammed contractor consultancy, eVirtualCompany, for allegedly marketing itself as a possible way of avoiding IR35.

IR35 is designed to force contractors who work for a single company for a long period to be treated as permanent employees for tax and National Insurance purposes, even if they are legally registered as limited companies.

The PCG is currently mounting a legal challenge to IR35, due to be heard in the High Court on 13 March.