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By Lisa Burroughes, 24 September 1999 00:30

NEWS The government's changes to its proposed IR35 legislation, that would affect one man service companies, haven't gone far enough - that's the message from an IT industry angered by a lack of proper consultation. The Professional Contractors Group met with the Inland Revenue for what it believed would be a full consultation, but representatives were shocked when they were told at the end of the meeting that ministers had already come to a decision. David Ramsden, director of the PCG, argued that the government was simply paying lip service to the contractor representatives. "There has been no proper consultation. This week the PCG was called in supposedly to have a consultation - but there was no consultation - we were simply being told what was going to happen," he said. Ramsden added that although the changes are an improvement, they weren't "good enough". His views were echoed by the Institute of Directors, who issued a statement saying it is concerned that the government has only made very small improvements. It said: "There remain major administrative difficulties, especially for companies involving more than one person and for partnerships." The proposed certification scheme and the simple control test - to determine if IT contractors are genuine limited companies - will be withdrawn. Instead the government will rely on an established method of determining the relationship between the employee and employer that predates the IT industry. The government rejected proposals put forward by the 360 Group to apply a minimum salary payment. Instead, if a contractor is determined to have an employee status it will be required to pay full PAYE (pay-as-you-earn) and NI on the gross pay minus deductions. Those deductions include pension and expenses deductions as well as a further 5 per cent to cover miscellaneous costs. Paul Daniels from accounting and financial service provider, Giant Group, who also attended the meeting, said: "We were being asked to sacrifice the troops, the Inland Revenue just wanted to know how many we were prepared to lose."