5 years ago... IT contractors lobby Lords on tax law

10.06.99: The House of Lords will today decide if the Welfare Reforms and Pensions Bill - which contains the IR35 proposal about one-person service companies - will proceed to the House of Commons to become legislation.

As it currently stands, the Bill could mean that many IT consultants currently operating as one-person companies will be forced to pay the same levels of tax as permanent employees. The government's own Regulatory Impact Assessment study found that the legislation would cause 66,000 small businesses to close down.

But David Ramsden, director of the Professional Contractors Group (PCG), believes this is a serious underestimate: "The effect of IR35 could be disastrous. We have 300,000 small businesses joined up, many of those would go out of business and equally many could go abroad."

10.06.04: IR35 became one of the IT industry's biggest issues. Contractors fought the legislation which they believed threatened their livelihoods while other suggested it was merely the closing of a tax loophole that had been exploited for too long and it was time for the meal ticket to expire.

Many contractors threatened to boycott and changes and simply ignore the existence of any new legislation, but their protests were quashed with threats of heavy fines and jail sentences.

Others chose to leave the UK altogether and work in countries where tax breaks were more favourable. The effect of this was a 'brain drain' according to contractors who claimed the government was forcing out genuine talent from the UK IT sector.

By November last year a silicon.com survey revealed IR35 had become a non-issue among IT departments (many didn't even know what it is) - a case of 'today's news becoming tomorrow's (silicon) chip paper.'