The Professional Contractors Group’s (PCG) judicial review action against the Inland Revenue over the controversial IR35 tax ended last Tuesday (20 March), with a final judgment expected to be given this week.

Richard Plender QC, for the Revenue, and Gerald Barling QC for the PCG engaged in five days of complex legal argument before Mr Justice Burton at the High Court.

The PCG’s case is that IR35 is an illegal provision of state aid contrary to EU law, and that the measure will prevent small personal service companies from competing with their larger rivals on an equal footing.

Susie Hughes, spokesperson for the PCG, said: ‘We are pleased that our case has been heard, and that the courts have listened to us where our elected representatives did not. There have been several findings of fact that are helpful for contractors. It is a shame we had to go to court to fight for small businesses - small businesses which this government has always professed to support.’

But lawyers felt the PCG’s action was unlikely to succeed. Kevin Barrow, head of the IT personnel group at City law firm Tarlo Lyons, said: ‘Mr Justice Burton is unlikely to allow the application to succeed. He was not generally persuaded by the PCG’s arguments, although they may well appeal to the relevant European bodies. This means that IR35 will carry on in effect and, from next month, contractors will have to pay tax and National Insurance contributions dating back to April last year as if they were employees.’