PCG remains committed to removing any barriers in contractors’ way

Contractors’ interests and the benefits they bring to UK PLC will be championed in all corners, and PCG remains committed to removing any barriers that affect contractors negatively, writes John Brazier of PCG in this article for ContractorCalculator. He believes the organisation is heading in the right direction, and says that the fact that its membership has grown by 15% over the past three years demonstrates the groundswell of support PCG’s activities command.

There is now no question that for the foreseeable future IR35 will not be abolished, as no political party is committed to removing it. So the contracting sector’s focus must now be on the 2011 Budget’s requirement of ensuring that IR35 is better administered. And that’s just one of many areas where PCG will continue to work on behalf of the flexible workforce.

We will be part of the process that monitors the operation of IR35 and will be working towards an outcome where genuine contractors and freelancers are excluded from its scope. Although it was our aim that IR35 would be abolished, we believe that we can create certainty for contractors and prevent more freelancers being unfairly labelled, and taxed, as disguised employees.

We have consistently opposed IR35’s negative impact on contractors

It is by being part of key processes that PCG can genuinely effect changes for the contractors and freelancers we represent. One of the strengths of PCG is that we can engage with a huge range of stakeholders on behalf of our members, responding, as appropriate, to a range of viewpoints and adapting the delivery of our message accordingly. The messages we publicly deliver are therefore shaped by political realities and take into account the intended recipients, be they politicians, civil servants or other stakeholders whom we educate on an ongoing basis.

During the Office of Tax Simplification (OTS) process of reviewing small business taxation, our primary position was for IR35 to be abolished. However, the OTS were looking for alternatives from the Consultative Committee, so we also focused on the objective business tests as a potential solution. As the review process went on, it was our understanding that the OTS was going to recommend merging income tax and National Insurance Contributions (NICs), which would apparently make IR35 irrelevant. Therefore the business tests seemed a good interim solution.

The IR35 debate has moved on

Clearly privy to information not available in the public domain, the Government has chosen to retain IR35 for the foreseeable future and limit the OTS proposed income tax and NICs merger. In light of this decision and to ensure freelancers are involved in key decisions affecting them, we have adjusted our tactics and will focus on ensuring that, as part of its better administration by HMRC, IR35 will not apply to genuine contractors and freelancers.

Our aim is to also promote business tests that can be integrated into HMRC’s guidance. We believe this will provide a workable solution as part of the better administration of IR35.

The OTS interim report on Small Business Taxation, which included its recommendations about IR35, clearly stated HMRC’s failings over IR35’s implementation, and we believe that simple solutions, such as setting time limits to investigations, could prove of huge benefit to those affected.

PCG has gained ground by NOT being a single-platform pressure group

PCG is not a single-platform pressure group, nor has it been for many years. PCG represents its members’ and the contracting communities’ wider interests by staging events such as the two highly successful National Freelancers Days. Other examples include securing a voice for flexible workers on the Confederation of British Industry’s (CBI) Trade Association Council and our office in Brussels has gained greater recognition across Europe of the validity of freelancing.

When preparing PCG’s contribution to the OTS’s analysis of IR35, the first step taken was to create an internal working group of members to assist with the creation and implementation of tactics. Our elected chairman, Chris Bryce, became a member of the OTS consultative committee. We commissioned Ernst & Young to ensure any policy positions were firmly grounded in fact and reality checked. Finally, we adjusted our message to ensure that it made political sense in a way that the target audience of Treasury and HMRC civil servants would understand.

PCG’s members guide what we do. All the activities of the 18-strong team of professional staff at PCG are overseen by the Board of Directors, the majority of whom are elected members. We, the professional staff, engage with members on an ongoing basis, and much of that engagement is face-to-face, which keeps us informed of what our members want. Not all of our members agree with everything we do; that is a sign of healthy and active debate that can only, ultimately, be of benefit to PCG and its members.

PCG has created ambitious plans on behalf of its members

That debate has stimulated the development of a forward programme of which the better administration of IR35 is only a part. We are planning more research into freelancing and contracting as part of our work towards enhancing PCG’s position as the UK’s authority on the flexible workforce. We wish to further educate stakeholders – clients and government among them – about the benefits that contractors bring to the UK economy. And we need to continue to show how the flexible working sector provides the UK with a huge competitive advantage over many of our global competitors.

Past campaigns, such as the highly effective ‘Britain’s Brain Gain’ and the publicity around National Freelancers Day have been hugely successful in this respect, and we will be building on this success. As part of our strategy to become the authority on contracting and freelancing, we have created a new website for our bi-monthly magazine, Freelancing Matters. Our intention is that this shall fill the gap between hard copy issues and further contribute to our positioning as the authority on the UK’s flexible workforce.

We will be vigilant in scrutinising new and proposed legislation. Most contractors will be out of scope of the Agency Workers Regulations, but we want to be sure that the client and agency community does not create new and unnecessary problems for contractors as this law comes into force. With our presence in Brussels and our deep links into government and opposition, we will remain ever alert for new red tape that may adversely impact on our members.

It is the nature of the UK’s fluid and vibrant political scene that the landscape shifts. IR35 will not be abolished for the foreseeable future, but there is a way for PCG members and flexible workers throughout the UK to benefit from this. It is my view that the vast majority of our members trust their association team to deliver the best deal possible for contractors as circumstances change.