The Professional Contractors Group (PCG) has written to the chancellor, Alistair Darling, ahead of his pre-budget report with a list of three demands. They are requesting that he scraps IR35, provides a less restrictive business model for freelancers to work within and drops ‘income shifting’ rules.

The PCG informed the chancellor that the recession has had a negative effect on those who work freelance, with a 12% fall in those working over the past year and an average drop in turnover of around a third.

Writing to the treasury, Mr Bryce, chairman at PCG acknowledged the pressure on Mr Darling regarding this pre-budget report given the current economic climate. However, Bryce stated that freelancers are not given a “fair deal”. He called IR35 “the largest single impediment to freelance working” and demanded that it be withdrawn.

Bryce wrote: “We know from past statements by ministers that IR35 is not known to be a revenue-raising measure. It is not clear that such monies as it raises in extra tax offset the considerable expenditure by HM Revenue and Customs in pursuing the many fruitless enquiries known to us.”

PCG also explained to Mr Darling that the current restrictive rules mean that, without a legal form, agencies are unable to pay freelancers gross.

He wrote: “PCH would like to see this measure abolished: it is a clear example of a tax measure distorting market behaviour, contrary to the government’s own express desire that the ‘tax tail’ should not ‘wag the business dog’”.

With regards to the proposed family business tax, Bryce said: “We welcomed the decision in last year’s Budget ti again postpone the introduction of legislation regarding ‘income shifting’, but we reiterate that it is essential these proposals are dropped completely with immediate effect. Treating jointly-owned businesses any differently to other businesses is iniquitous and unfair. These proposals fail to take into account the shared risk and responsibility involved in running a business, and would harm thousands of such enterprises.”

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