Another Nail in the IR35 Coffin. Victory for a Contractor
It’s no secret that, for the average contractor, the previous government’s IR35 legislation proved to be far from popular. The last administration claimed that too many people were leaving their ‘employment’ on a Friday, only to return to the same office in the same company the following Monday, undertaking the same work as the week before claiming to be a ‘contractor,’ rather than an employee – and paying substantially less NIC and tax as result. contractors, by contrast, have seen the legislation as an unfair and indiscriminate barrier to business, ensnaring many Ltd companies and individual workers alike who were simply going honestly about their business, not exploiting tax loopholes.
In lieu of the new government’s proposed review of IR35, a recent tribunal ruling has highlighted the legislation’s ambiguity and potentially harmful effects. A Contractor who had provided services to the Avecia company since 1998 has just overturned a decision by HMRC. Avecia had provided all the IT equipment necessary for his duties and the contractor, Mr Brajkovic, became concerned about his status, requesting clarification about his contract from HMRC in 2000. The latter conducted an investigation, concluding that he was an employee and owed substantial payments in tax and national insurance as a consequence. But the tribunal, which was conducted at the end of last month, found otherwise. Judge Kempster dismissed the HMRC case that Brajkovic was a ‘disguised employee’ and asserted instead that the overall picture was ‘one of a contract of self-employment.’ The judgement is likely to bolster IR35’s numerous critics in the contracting world, who strongly believe that the legislation is too indiscriminate and too incapable of recognising real complexities to be either just or functional.
