Professional Contractors Group
Encyclopedia
The PCG is a British
not for profit organisation. It was established in 1999 as The Professional Contractors Group, a protest group against the IR35
tax statute. Later, it expanded its responsibilities to cover wider interests of freelance consultants and contractors as full representative body for freelancing in the UK, in the form of a company limited by guarantee. It is a not-for-profit organisation owned and run by its members. Anyone may join, and while often members run their own limited companies, sole traders and contractors operating via partnerships or umbrella companies are also well represented within the membership. It represents members in numerous sectors, including IT, engineering, interim management, media, project management, healthcare, oil and gas extraction and marketing.
In addition, PCG runs a number of schemes for the benefit of its members, including:
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
not for profit organisation. It was established in 1999 as The Professional Contractors Group, a protest group against the IR35
IR35
IR35 is a term used to denote United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment. In this context, "disguised employees" means workers who receive payments from a client via an intermediary and whose relationship with their client is such that had...
tax statute. Later, it expanded its responsibilities to cover wider interests of freelance consultants and contractors as full representative body for freelancing in the UK, in the form of a company limited by guarantee. It is a not-for-profit organisation owned and run by its members. Anyone may join, and while often members run their own limited companies, sole traders and contractors operating via partnerships or umbrella companies are also well represented within the membership. It represents members in numerous sectors, including IT, engineering, interim management, media, project management, healthcare, oil and gas extraction and marketing.
Issues on which PCG has campaigned
- IR35IR35IR35 is a term used to denote United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment. In this context, "disguised employees" means workers who receive payments from a client via an intermediary and whose relationship with their client is such that had...
: PCG challenged this legislation with a judicial review and continues to lobby for its replacement. In November 2010 Chris Bryce, the current Chairman of PCG, took up a seat on the consultative committee of the small business taxation group of the Office of Tax Simplification.
- S660AS660AIn its United Kingdom Tax Bulletin 64 , the Inland Revenue announced new guidance on the "settlements legislation". This is a body of law which seeks to prevent someone from avoiding tax by reclassifying income as belonging to someone else...
: PCG took the first test case (Arctic Systems) on this issue through the courts and won. It continues to lobby government against changes aimed at restoring HMRCHer Majesty's Revenue and CustomsHer Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support....
’s interpretation of the statute.
- Managed Service CompanyManaged Service CompanyIn the United Kingdom, a form of company structure has evolved known as a Managed Service Company . Largely born from the IR35 legislation in 1999 which came into force in 2000, this form of corporate structure places workers and contractors typically into a group of between 5 and 8 people as...
legislation: PCG campaigned to ensure that the legislation was not unfairly applied to companies outside the intended target.
- IR591: In his Pre-Budget Report of 2003, Gordon Brown announced plans for a new tax measure aimed at freelance contractors, but did not publish any details for consultation. PCG lobbied the government extensively and launched a public campaign: the resulting measure, a 19% corporation tax rate for firms with profits of less than £50,000 and the abolition of the zero starting rate introduced a couple of years previously, was the "least worst" of all possible outcomes.
- Agency Regulations: in 2002 the government introduced a set of regulations covering all workers who acquire work via recruitment agencies. PCG negotiated successfully to secure an opt-out from the regulations for contractors.
- Software patentSoftware patentSoftware patent does not have a universally accepted definition. One definition suggested by the Foundation for a Free Information Infrastructure is that a software patent is a "patent on any performance of a computer realised by means of a computer program".In 2005, the European Patent Office...
s: although not an IT specific organisation, PCG responded to the concern expressed by its members in IT at the proposed directive on the patentability of computer-implemented inventions, commonly referred to as the software patents directive. As the UK’s IT bodies were all in favour of software patents, PCG campaigned against the directive. The European ParliamentEuropean ParliamentThe European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...
rejected the directive on July 6, 2005.
- Work permits: from 2000, the IT contracting market became depressed, yet the government still listed IT as an area in which skills shortage existed and therefore gave prioritised entry to the UK for IT workers from overseas. Lobbying by PCG led to IT being removed from the skills shortage list in 2002.
- OffshoringOffshoringOffshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring...
: PCG has undertaken the first empirical study of the effects of offshoring (whereby a company’s IT services, for instance, are performed by a service provider in another country), which suggests that the cost benefits promised on paper often fail to materialise in practice. PCG is campaigning on this issue because the UK’s IT bodies do not see it as a problem, although it is increasingly also becoming an issue in other sectors represented by PCG.
- The Temporary Agency Workers directive: it was for some years a concern to PCG that this directive, intended to provide rights to vulnerable workers, risked entangling professional contractors who did not require protection. The directive was withdrawn in September 2005, although the European Commission has reserved the right to revisit the issue in the future.
- Abuse of the intra-company transferIntra-company transferIn an intra-company transfer, a company transfers an employee to work temporarily in a different office, often in another country....
rules by major corporations in the UK. The PCG alleges that some companies are misusing the immigration rules that allow company employess to enter the UK. A campaign website (www.ictabuse.org.uk) has been set up to explain the allegations in detail.
- Encouraging the use of Freelance workers within industry. PCG run a campaign to promote the use of freeleance workers called Britain's Brain Gain .
Member services
PCG offers its members a range of services as part of its membership package. These include:- Tax and legal helplines
- Insurance cover against disputes with the Revenue
- Access to members-only discussion forums
- Standard template contracts
- Extensive guidance documents on IR35, S660A, agency regulations and how to go about setting up as a freelance contractor
In addition, PCG runs a number of schemes for the benefit of its members, including:
- PCG QS (Quality Systems), the world’s first ISO:9001 certification system designed specifically for small businesses, by which businesses can gain full certification for less than a tenth of the normal cost.
- An Approved Contract Scheme whereby agencies who offer contacts that are sound both commercially and from a tax perspective are marked as PCG approved.