IR35 migrants warned on risks of running

The introduction of IR35 is driving many British IT contractors abroad to avoid the tax, but without enough local information they could be no better off.

Contractors moving to Germany are being warned that German regulations concerning self-employment are well established and that every year tax inspectors catch many of the people who try to evade them.

Tax consultant Viktor Koltun said that since the regulations came into force in April 2000, there has been a real migration into other European countries.

"I am currently working on four cases myself," Koltoun said, confirming the existence of the IR35 problem. "Many British people want to save or secure their pensions in other European countries, however most of them do not know the relevant tax limitations,"

Inexperienced IT contractors are also being targeted by German conmen, according to Koltoun. He is working on a case of a German employer, who he could not name, which employed young Irish and British people straight from university under false pretences.

"He relied on them believing the lies about tax freedom and unfortunately it worked," said Koulton. He laid blame for the problem on lack of knowledge and understanding of tax issues in Great Britain, as well as the dubious business practices of some German companies.

He warned: "Anyone who wants to work in Europe must familiarise themselves thoroughly with the local practices."

However, Alfred Otting, from the department for self-employment at the Federal Labour Ministry, said IR35 is not a big issue. He said: "Currently we only have problems with British people who work for German companies but want to continue to pay their taxes in Great Britain."

By Kathrin Schmitt, reporter, http://www.silicon.de