IR35: 'The Revenue' faces the music in Court of Appeal

The Professional Contractors Group is set to take its legal fight against the controversial IR35 tax ruling to the Court of Appeal.

The case went before the High Court earlier this year, and although the judge was highly critical of the way the Inland Revenue had imposed IR35, the court found it was not in contravention of European legislation.

The PCG insists, however, that the government's controversial tax rule is illegal under European law.

A spokeswoman for the PCG said: "At the last review, the findings of fact were in our favour, but the finding in law was that IR35 should not be struck down."

The PCG has no new evidence or arguments to influence the outcome of the appeal, but it hopes that a new hearing will find its favour.

"There are no precedents of tax rules being challenged on a point of European law, so our lawyers thought it was worth another go," said the spokeswoman.

"We could well take this to the European Court if we aren't successful in the Appeals Court," she added.

IR35 is a rule introduced into the March 1999 budget that makes individual contractors who work for a single client for long periods liable for income tax as if they were employees.

The Professional Contractors Group was formed in May 1999 to fight IR35. Most of its 14,000 members are IT contractors.