3 sixty group

NEWS

3 sixty group, Media House, 4 Stratford Place, London  W1N 9AE
Tel: 0845 20 20 360  Fax: 020 749 38 361

                                                                                                18 February 2000

IT Contractors Face Huge Tax Bills Due to Inaccurate and Misleading Advice

3 sixty group have issued a warning to IT Contractors who are using “IR35 Compliant Contracts” to check that they are not heading towards a costly fight with the Inland Revenue.

“After a year of heated debate Contractors remain confused about the true impact of the legislation and their fears are being played upon as a means to sell alternative forms of contract. Some of these could result in the Contractor incurring bills for unpaid tax & NI and additional penalties up to £3000.”, said Iain Sutherland of 3 sixty group.  “Applying an alternative ‘IR35 proof contract’ will not remove that liability where the contract does not reflect the actual work being undertaken on site.”

Sarah Walker of the Inland Revenue has made it clear that due to the high profile nature of the IR35 debate it will not be reasonable for Contractors to claim ignorance when their Tax and National Insurance payments are assessed and the penalties for underpayment will therefore be set at their maximum.

Contractors working through Limited Companies will remain significantly better off than their PAYE counterparts even if they fall under the IR35 changes.  The increase in take home income as a Contractor with a Limited Company is on average double that of a permanent equivalent.  Contractors who are working as sole traders or contracting directly with the end client will still face identical IR35 tests.

Ends

Notes to editors

1. 3 sixty group are a leading firm of Accountants specialising in the IT sector
   
   
2. 3 sixty group administer the IR35 Consultation Group, which was formed as a non-profit making lobbying group to represent the voice of the FTSE top 100 Companies on IR35.
   
   
3. UK business has consistently criticised the IR35 proposals as ill formed.  They have contested that the additional tax burden on contractors will be born by End-Users and as such costs will rise.  This is confirmed in the latest Government Regulatory Impact Assessment, which agrees with the industry’s beliefs and confirms that there will be some loss in International Competitiveness for UK PLC.

For further details please call Iain Sutherland or Brian Keegan at 3 sixty group on 0845 20 20 360