Contract engineers worried about 'backdoor' tax move

Contract engineers worried about “backdoor” tax move
Richard Wilson
Contract engineers and their colleagues in the IT sector are expressing concern over recent government moves to introduce “through the back door” new tax changes which affect the contracting community.
The Professional Contractors’ Group (PCG) is one of a number of groups lobbying the government over tax changes announced in the Budget. Despite the setting up of a consultation period, the PCG fears that amendments to the Welfare Reform and Pensions Bill being proposed this week will short-circuit the consultations.
“If accepted, these proposals will clearly signal the government’s intention to introduce wide-ranging proposals which will impact on many independent contractors,” said David Ramsden, director of PCG. “This is legislation through the ‘backdoor’ and is being introduced before the Revenue has had an opportunity to consider submissions.”
The issue centres on tax proposals by the Chancellor which are intended to counter tax and NI avoidance in the area of personal service provision (IR35). He explained how someone who leaves employment on a Friday and returns on Monday to do the same job as an indirectly engaged ‘consultant’ pays substantially reduced tax and NI contributions.
But contractors believe the legislation will impact on them and create a situation where a limited liability company is treated as an individual temporary employee – with a only few limited exceptions. They were encouraged by the fact that the Revenue intended to discuss the proposals with interested parties, but this amendment by DSS comes before these consultations have taken place.
Information about PCG is available on: Website www.engineerjob.com


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