IT body presses on with judicial review of intermediaries law

Gordon Brown, the Chancellor of the Exchequer, made no mention of the unpopular &quotintermediaries legislation&quot when he unveiled his budget on Wednesday.

In response, the Professional Contractors Group will press ahead with a judicial review of the legislation in the High Court next week.

Gareth Williams, chairman of the London-based group, said: &quotThis budget gave the Chancellor the last opportunity to right the wrong before the PCG's legal action to defend the rights of small businesses to operate on a level playing field with their larger competitors.&quot

He added: &quotThere is little point in the Chancellor making token gestures to small businesses when many of them would have closed down or moved overseas because of this law,&quot she said.

&quotBrown is clearly no friend of smaller business or of high technology and next week we will press ahead with a judicial review of the legislation, which is illegal under European law.&quot

The new tax rules, which came into effect in April 2000, targeted IT contractors working through their own companies. Brown ruled that they would pay the same tax and national insurance as a full-time employee. The law has caused a 20% drop in IT contractors' disposable income and is expected to exacerbate the UK's IT and e-commerce skills shortage.

&quotWe have little confidence at this moment that a full repeal will come through in time,&quot added Susie Hughes, spokeswoman for the PCG, which has set up a website, www.shout99.com, to lobby against the tax law for IT contractors.

The legislation, known as IR35, treats small businesses in the IT sector as &quotdisguised&quot employees for tax and national insurance purposes. This prevents these businesses operating on similar terms to their larger competitors.