In December, the Professional Contractors Group (PCG) lost an appeal which challenged the legality of the IR35 legislation. The PCG was set up specifically to lobby against the tax which was announced after the March 1999 Budget. It sought judicial review to have the legislation wiped from the statute books, arguing that it was illegal under European law. The Court of Appeal disagreed, as did the High Court before it.
The survey by NamesFacesPlaces.com, a site for IT contractors found that 19% of the contractors surveyed have made changes to their contracts which they hope will take them outside IR35. Gerry McLaughlin, the site's founder, writes:
"A further 17% are saving up for a hefty tax bill. Only 15% have joined an umbrella company. There seems to be some caution about this option. Another 8% have consulted an IR35 consultant. The big date, of course, is in April when contractors have to make their P35 returns, if they consider themselves to be inside IR35, or they think that the Inland Revenue will consider them to be inside it."
McLaughlin added:
"If the 41% holds true across the whole marketplace, then that represents something like 30-40,000 contractors who have done nothing at all so far. This is frightening, and one fears for them once the Inland Revenue decides to take action."