Six out of ten freelancers consider themselves to be outside the so-called stealth tax 'IR35' - while two out of ten think they are caught by it and a further two out of ten are unsure.
The survey, conducted by Shout99, the UK's largest network of freelancers, is one of the biggest and is the most recent carried out in this area, covering 543 individuals from IT, engineering and other knowledge-based businesses.
It found that 60 per cent (329) considered themselves outside IR35 this year; 21 per cent (111) considered themselves caught by IR35; and 19 per cent (103) were uncertain of their status.
The level of uncertainty caused by the lack of case law relating to IR35, together with the fear of penalties if the Revenue subsequently found against the freelancer, has caused many small businesses to be unable to operate with any confidence in the knowledge-based sector.
Andy White, managing editor of Shout99 and leading campaigner against IR35,
said: "Although the majority of freelancers who completed our survey believe they have moved outside, it is still bad news for the 40 per cent who are caught or unsure - and that is also bad news for the UK economy to have such a high proportion of this highly-skilled and entrepreneurial workforce
having to operate with this level of uncertainty.
"This does show that the operating environment is changing and, with professional support and comprehensive information, I believe that this 40 per cent can be significantly reduced in the coming year, as freelancers learn how to move themselves outside IR35.
"This survey was conducted within the Shout99 network of freelancers, who are likely to be among the best informed about IR35 and related matters. But there will be a wider community who do not have access to reliable information and who decide to 'tick the box' and pay the tax, without considering all their options."
Shout99 has recently launched a complete business operating system, Freelancers Outside IR35,(FO35) which gives the 40 per cent a greater chance of being outside IR35 - and provides them with professional help and protection against possible penalties, thereby removing the cost of uncertainty. It also gives the 60 per cent who think are outside clear and expert guidance on how to document and demonstrate their decision-making process, as well as providing the protection and support and continuous updates from experts.
Further information is available on http://www.shout99.com
Susie Hughes, Shout99…..020 7462 7955 or 07703 486276
Notes to editors.
Shout99 is the UK's largest news, information and services network for freelancers. There is no membership or joining fee. It operates from http://www.shout99.com
The survey was conducted online among members of the Shout99 network in January 2003. The question asked was 'For this year, do you consider yourself to be a) caught by IR35; b) outside IR35; or c) unsure of my status?'
For more information about 'Freelancers Outside IR35' see
IR35 was announced in the March 1999 Budget and introduced the following year. Its intention is to treat freelancers operating through 'personal service companies' as disguised employees for tax and NIC purposes rather than as genuine small businesses.
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