The Professional Contractors Group (PCG) will take its legal fight against the government over the IR35 tax to the Court of Appeal later this year. The tax, which in certain circumstances taxes independent consultants as permanent employees of the companies to which they contract out their services, came into force on 6 April.

In March, the PCG brought a judicial review before the High Court on behalf of its 14,000 members, arguing that IR35 was illegal under European law. The Court upheld the IR35 tax proposals as lawful and rejected the PCG’s claims that the law is incompatible with European free trade laws and the Human Rights Act.

The judge did however criticise the Inland Revenue’s handling of the issue as confusing and in some respects ‘inflexible.’

The PCG has decided to fund an appeal against the High Court decision because ‘we believe we have a good case and we want to fight for our right to run small businesses,’ according to the body’s chairman Jane Akshar. ‘These people are hardworking businessmen and women whose businesses are being damaged and in some cases destroyed because of unfair treatment by the government.’

The PCG is believed to have raised around £500,000 to fund its legal battle against the government. The contractors group was awarded costs in March’s hearing. A date for the appeal is expected to be set for November.