Contractor Wins IR35 Battle With HMRC

A contractor has won a long running court battle with HMRC over an IR35 related tax payment. Engineering contractor Mark Fitzpatrick was found to be clear to use his Limited Company ‘MBF Design Services’ to avoid tax whilst working as a contractor for Airbus. This ruling follows another high profile case involving contractors at the end of last year.

The PCG have worked to highlight the issues caused by IR35 legislation which affect contractors, and are working with the Office of Tax Simplification to help their review. PCG Chairman Chris Bryce, who is also part of the OTS Consultative Committee, was delighted with the ruling of the case, which the PCG supported Mr Fitzpatrick throughout.

“It has been tough on Mark, a freelance contractor of great integrity and we are delighted for both him and his family. It shows yet again that IR35 is wasting taxpayers money in its application to freelancers. We are working closely with the Office of Tax Simplification to try and bring clarity for the freelance community.”

The tribunal found that there was a lack of ‘Mutuality of Obligation’ due to the fact that; Airbus could cancel MBF’s contract without notice, and due to a specific case where contractors were sent home without pay whilst permanent staff had to remain on site following a computer failure.

Mr Brice spoke again saying, “This is a significant victory for the freelance community with particular emphasis on Mutuality of Obligation- a forgotten core principle of being in business.”

Matt Boddington, who represented Mr Fitzpatrick through Accountax Consulting, ended on a triumphant note for the freelance and contracting community;

“This is a significant bloody nose for HMRC and highlights that if parties arrange their affairs correctly and if these arrangements are an accurate reflection of reality then the IR35 legislation simply will not bite.”

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, including our own Limited Company service. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.