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Professional Contractors Group: A decade on from IR35

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21st Jan 2009
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IR35As the Professional Contractors Group (PCG) celebrates its 10th anniversary, AccountingWEB's Gina Dyer spoke to PCG managing director John Brazier about the group's decade-long struggle against IR35 and future strategy.

This March will see the 10th anniversary of the notorious Inland Revenue Budget-day press release, IR35, that marked a major change in the way so-called personal services companies were taxed.

Independent IT contractors in particular felt victimised by the measure and flocked to AccountingWEB to voice their complaints to a sympathetic audience of professional advisers. AccountingWEB could not cater for all the contractors' needs and before long their online campaign coalesced into the PCG - a campaigning group with its own website.

From its origins as a single-issue lobby group whose main target was IR35, the PCG has matured into a representative body for independent contractors and consultants. As well as monitoring and supporting members affected by the dreaded IR35 rules, the PCG offers advice on contractual law and wider accounting issues.

With changes to income shifting and other changes to small company tax rules still lurking under covers in Whitehall, the PCG continues to petition for fairer conditions for this often overlooked sector.

"Going forward, we hope to push the concept of freelance and contractual working further into the public eye," says managing director John Brazier.

The worsening economic climate, and rising redundancies among big organisations appear to work in the PCG's favour as more staff consider the possibility of going it alone. But Brazier remains cautious: "It's difficult to predict what the next year will hold. At the moment it looks quite positive, although it’s probably a bit early to tell how the recession is going to affect the contracting and freelance market."

Tackling IR35

With regards to how far the organisation has gone to tackle IR35, Brazier is candid: "IR35 will always be there because it's on the statute book, so it's a question of working with it, rather than against it."

He argues that one of the PCG's main issues is establishing solid regulations on contractual issues and ensuring that contractors are protected once they're up and running on a project, particularly in cases where contractors work through an agency.

"More and more it seems that the way one operates on the ground is an issue. You might have a very good contract which ticks all the right boxes in terms of putting your status outside of the remit of IR35, but if the operating procedure is different once you're working directly with the client, you have to be careful. We actively encourage our members not to think like employees in every sense of the word."

Despite all its efforts, however, has the PCG succeeded during the past 10 years in making the government more aware of the needs of contractors and freelancers?

"We make sure we are in front of government ministers and civil servants as much as we can be to educate them," offers Brazier. "Through this they are beginning to become more aware of the activities of our market and the people we represent."

In-depth research

To further make the point, the PCG recently commissioned a study in collaboration with Kingston University to pinpoint exactly how many registered freelancers and contractors are currently working in the UK. The initial figure was 1.4m. This continuing project will aim to obtain more data about how the freelance/contractor market operates and which sectors house the most active freelance communities.

This research, along with an online survey of freelancers will eventually be used to produce a paper that will outline the market structure and working practices of freelance workers and contractors.

"Through these initiatives we’re hoping to gain a greater depth of knowledge about how the market operates, which we can then use to lobby the government more effectively," says Brazier.

Brazier's diplomatic tone constrasts sharply with the fighting rhetoric typical of the PCG's early years. His comments show how the PCG itself has matured during the past decade. Like other professional bodies in the tax arena, it seeks to work the inside channels rather than directing critical barbs towards Whitehall.

As one would expect for such a landmark occasion, there are a host of events planned to mark the PCG's 10th anniversary, including a high profile celebration in London for members, several political gatherings in Scotland, and a reception in the House of Commons later in the year.

It remains to be seen what the next 10 years will hold for the freelance and contractors market, but Brazier hopes the PCG will continue to represent a significant part in it: "We're certainly looking to beef up the organisation and raise the stakes a little bit. We want to keep growing the membership, which hopefully will give us an even stronger position from which to lobby the government."

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