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The PCG wants to challenge this through a Judicial Review and is calling on its members to come forward with evidence of real cases and let the PCG to represent them.
The public sector rules have been controversial since they were first mooted, and this is intensified by the belief that some Government Departments are going way beyond the guidelines.
They were introduced as a kneejerk reaction by the Government after severe media criticism of a practice by some senior public sector workers such as Ed Lester of the Students Loan Company, who operated through their own limited companies as a way of mitigating their tax and NIC liabilities.
The Government informed all Departments that they must ensure that any contractors they use are compliant for tax purposes, either within IR35 or providing evidence that they are outside. (See: HMRC's business tests at heart of new rules for contractors Sept 12, Shout99).
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Judicial review
Now the PCG members has called its members to arms, citing previously hard fought and won legal struggles such as that in the House of Lords six years ago with the Arctic Systems married couples business tax (Section 660).
In an open letter to members, Chairman Chris Bryce reminds them what 'the small guy can achieve when he’s teamed up with the right people' and seeks contractors involvement in a Judicial Review.
He stresses that the PCG now needs its members help for a new battle, not financially, but commitment and determination.
He wrote: "Government Departments and their executive agencies now require contractors to provide assurance that their tax obligations are being met. In theory this seems reasonable enough but in practice, as many of you unfortunately know first-hand, it has caused a great deal of confusion, disruption and damage."
HMRC’s has guidelines but the freelancer group says they are unclear and Departments are apparently gold-plating them.
The group says that an independent contract review should be sufficient proof, but it has received reports that some Departments are refusing to accept the validity of the contract reviews and, under threat of contract termination, force contractors to operate IR35 or move to using an Umbrella, regardless of their actual IR35 status. It also believes that in some cases Departments are insisting that contracts are reviewed only by HMRC.
Mr Bryce continued: "PCG considers this practice to be unacceptable and has taken legal advice. We do not believe that a Government Department has the right to force our members to operate IR35 if their contracts are outside IR35. We want to challenge this by a pursuing a Judicial Review and we need members to come forward to supply us with real cases and allow us to represent them."
PCG intends to cover all of the legal costs of the Judicial Review.
A Judicial Review is a challenge in the court as to the legality of a certain issue. It was used, unsuccessfully, by the PCG against the introduction of IR35.
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Susie Hughes © Shout99 2013
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