The government introduced the IR35 legislation in March 1999 to remove what it saw as a loophole for IT contractors to trade as limited companies to avoid tax and National Insurance Contributions, in circumstances where the individual worker would otherwise be an employee of the client for whom they work.
The Group believes that some agencies are using the confusion and uncertainty surrounding the tax to their own advantage by making claims aimed at scaring clients and contractors into using an agent as the "middleman" in contract deals.
The PCG says that many contractors are now seeking work directly from clients, rather than, as was usual, contract via an agency. The IR35 legislation says that contractors are at risk of being treated as "disguised employees" of their client for tax and NIC purposes, but confers no employment rights directly.
According to the Group, Computer People is now using as a "salespitch" a claim that if clients put an agent between themselves and the contractor, there is no risk of employment rights. However, the PCG believes that the use of an agent has no bearing on this.
Director of the PCG, Ian Durrant, said:
"The Government's legislation has created a mine-field of real confusion and chaos in the contracting sector. However, some agencies are now capitalising on this fear, uncertainty and doubt to make dubious claims for their own commercial advantages. It is bad enough that our members have to contend with the real problems that this legislation has brought, without Computer People and others using this climate to try to 'scare' clients away from contracting directly. The agency regulatory bodies should make a clear statement about this practice and condemn the use of such claims to build a business."