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The Professional Contractors Group has updated its draft contracts to included the latest guidance and case law for contractors to demonstrate they are outside the IR35 restrictions.

The draft contracts are available to PCG members and cover the range of business-to-business relationships involved in contracting: contractor to client; agent to client and contractor to agent.

The original sample contractors were issued by the PCG in March 2000 and have been widely used by PCG's members, including contractors and agents.

The latest sample contracts have been reviewed and updated in the light of comments made by Mr Justice Burton at the PCG's judicial review of the Government's action relating to IR35 in April 2001.

Although, the decision of the judge was not in PCG's favour, he was highly critical of the manner in which the Inland Revenue was implementing and interpreting the legislation and issued important guidance for contractors and Revenue officials.

The sample contracts cover the form and content of a typical business-to-business contract for services and would place their users outside IR35 provided the contracts accurately reflect the reality of the relationship.

Tax expert, Anne Redston, who is a partner at Ernst & Young and advises the PCG and its members on IR35 issues, has reviewed the new PCG model contracts and confirmed that: "These contacts reflect the current case law which determines whether someone is inside or outside IR35.

"Where the 'direct' contract, between the client and the supplier, is put in place and it accurately reflects the relationship between the client and the worker, then, based on current case law, the contractor will not be caught by IR35.

"Similarly, where the 'back-to-back' contracts between the client, the agent and the supplier are put in place, and they accurately reflect the relationship between the client, and the worker, then based on current case law, the contractor will not be caught by IR35."

PCG's Chairman Jane Akshar said: "Our main concern has been the uncertainty and lack of clarity surrounding the implementation of IR35. Contractors have not known whether they were inside or outside this legislation. The comments by Mr Justice Burton after the judicial review went some way to trying to improve this situation and these contracts now reflect that situation and, we hope, will give some comfort to our members when they negotiate business to business arrangements with their agents and clients."

PCG annual membership for contractors is £100+VAT and clients, agents, accountants, lawyers and other interested parties can become associate members for £250 + VAT. In addition to access to the sample contracts, membership includes:

Access to the latest news, views and discussion forums

Discounted Professional Indemnity Insurance

Discounted Public Liability Insurance

Discounted Employers' Liability Insurance

Tax Investigation Insurance

Comprehensive advice and resources on IR35

Tax & Legal Advice

Independent Accounting Advice


IR35 was announced in a Government press notice after the March 1999 Budget. It treats small businesses in the knowledge-based sector as 'disguised employees' for tax and NI purposes, thereby preventing them from operating on similar terms to their larger competitors.


The PCG challenged IR35 in a judicial review in the High Court in Spring 2001. The Group is appealing the decision and the case is expected to be heard in the Court of Appeal in November 2001.


Notes to Editors;

1. The Professional Contractors Group was formed in May 1999 to lobby
against the Government's IR35 proposals. It is a non-party political group and its patrons are cross-bench peer, Lord Weatherill, former Speaker of the House of Commons; and industry guru Sir John Harvey-Jones. Since its
formation it has evolved into the representative body for independent
contractors from many disciplines including IT and engineering on many
issues affecting the knowledge-based sector. It is the fastest growing trade
association in the country and now has more than 14,000 members.


2. The PCG's aim is to work for proper recognition of independent contractors as a genuine and valuable sector of the economy, generating wealth and employment, providing industry with a flexible workforce. The Internet has been the primary resource, providing fast, effective communication.


3. For further information: http://www.pcgroup.org.uk


For media enquiries contact:

Susie Hughes
020 7462 7955
press@pcgroup.org.uk

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