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Bob Jones, a former Inland Revenue tax inspector however reassured the contractor not to be afraid of changing accountants but to ensure they chose accountants that were able to fulfil all the necessary requirements.

Speaking on Contractor UK, Mr Jones said;

“HMRC do not publish their risk analysis strategy, but they are generally more interested in the figures in the accounts rather than the firm involved in the production. Remember though that whether local or offline, a professionally qualified accountant has been trained and must adhere to certain standards. If you look for an accountant outside that sphere then, of course, you do need to be careful. HMRC are aware that there are certain tax advisers that should really be doing something else!”

“The bottom line is that changing accountant should not cause a problem provided you go to someone who is reputable and, preferably, qualified.”

Independent Contractor Services (ICS) offer accounting and payroll solutions to the contractor marketplace. Guided by the principles of trust, care and compliance, we specialise in Umbrella, Limited Company and Sole Trader solutions.

The hearing related to an IT contractor, John Spencer, and his limited company, JLJ Services Ltd, through which he was contracting to German insurance company Allianz. Mr Spencer worked as a contractor to Allianz between 2000 and 2008, however his contract changed in 2004 so that he was effectively employed by Allianz, albeit in a contract role.

Mr Spencer, represented by ClearSky accounting, had been faced with a tax bill of more than £200,000 including interest from HMRC for the length of his time at Allianz. The tribunal found that his contract up until the end of December 2003 fell outside of IR35, however his work from 2004 onwards was liable for tax as he was inside IR35.

A number of factors were picked up, such as a lack of a proper right to substitution, which the tribunal judge called a “sham” in this instance, and the degree of control that Allianz had over Mr Spencer in terms of engaging with him indefinitely. So whilst Mr Spencer was found to be inside of IR35 his liabilities were much less  than originally demanded, which meant a partial victory in this case.

Following a number of IR35 cases in recent months, employment law specialist Kate Cottrell, of the OTS and IR35 Forum gave some advice to those taking contracts. Speaking about the case she said; “[It] is indeed the first time we have ever had a split. It clearly highlights the need to consider IR35 for each and every contract, [at both] extension and renewal.”

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

The details of this case, which was delivered on the 27^th July this year, saw Autoclenz Limited, a car valeting firm, who had used a number of car valeters claiming to be self employed. Although their employment contracts made out that they were self employed, through their work practices they were actually found to be employees of Autoclenz Limited.

The Supreme Court judgement discovered that in 2007 Autoclenz produced new contracts, which stated ‘Autoclenz wishes to engage the services of car valeters from time to time on a sub-contract basis’ and that the sub-contractors ‘would not be obliged’ to provide their services’ nor were ‘Autoclenz obliged to engage their services on any particular occasion’.

Whilst this meant that the contracts covered mutuality of obligation, which shows similarities to recent IR35 contractor cases, the contract was not true in practice. So as stated in the final judgement, as it did not accurately reflect what was agreed between parties, the court was able to overrule the written contract.

The employment tribunal judgment, which was being appealed at the supreme court, ruled that the claimants were seen as employees, listing a number of factors such as; no real control over the hours worked, subject to the direction and control on site and no say in the terms upon which they perform work.

Law firm Pinsent Masons said that this case demonstrates the risks of a contractor working under practices that do not match the obligations in their contract. “This decision highlights that all the good work in a contract can be undone by an individual who seeks to dispute that the contract reflects the intention. This case also highlights the importance of contractors in not only ensuring that an IR35 compliant contract is in place, but that the day to day reality of the relationship reflects those terms.”

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

When the government committed to retaining IR35 legislation at the budget in March, it was discovered by the Office of Tax Simplification that HMRC investigations into contractors thought to be inside IR35 were fairly inefficient. They reported that many cases took between two and four years to complete, with the number of investigations noticeable dropping in the last two years.

However, PCG managing director John Brazier believes that HMRC are still continuing to bring cases against contractors. He hopes that the continued work of the IR35 Forum will help to put an end to these kinds of cases in the future.

“We are still fighting IR35 on all fronts to defend our members. This means meeting HMRC both in the courts to defend individual cases and at policy level in the IR35 Forum to stop these misapplied cases happening in future.”

Phil Winfield described his eight year fight as bringing “considerable emotional and financial strain” which has meant a “stigma hanging over me and my business for many years”. He also praised the work of the PCG who have supported many freelancers in the fight against IR35.

Mr Brazier continued by expressing his delight for Mr Winfield and yet another victory for the freelance community. “Frankly, clarity for Phil was long overdue, but we are delighted he can finally get on with developing his genuine freelance business.”

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

Gary Hughes, an engineering contractor who operated his services through his limited company Marlen Ltd, had contracts with two divisions of JCB. HMRC had argued that despite working on these contracts Mr Hughes was seen to be similar to a senior employee of JCB.

The legal firm Accountax Consulting, who have represented contractors previously on behalf of the PCG, argued on behalf of Marlen Ltd that IR35 legislation did not apply in this instance. This was agreed with by the tribunal, with Judge Lady Mitting confirming their findings.

“We have considered two factors – mutuality of obligation and control. These are the two factors which make up the irreducible minimum required to demonstrate a contract of employment.”

“It is our conclusion that there is no mutuality of obligation and the degree of control which would have been needed to establish a contract of employment just did not exist.”

The lack of this ‘mutuality of obligation’ as well as other factors which made it clear that work was determined by conditions of the contract showed similarities to the previous case of MBF Design Services Ltd.

With HMRC struggling to get anywhere with their IR35 cases, there is mounting hope that the IR35 Forum’s ongoing work will bring a clearer and more straightforward solution to the current burden of the legislation.

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

“Our primary concern is always the welfare of our members so we are pleased that the dark cloud of £50,000 in misapplied tax has been lifted for Elaine. This also shows that PCG, working with HMRC on the new IR35 Forum, need to tackle these extremely long running and stressful cases.”

“We believe it is refreshing to see the realities of running a business recognised as a factor.  It is our aim to take all legitimate freelancers out of the scope of IR35.”

Mr Bryce spoke positively about the formation of the IR35 Forum, describing it a “chance to make a real difference” for those affected by IR35. This came following a pledge from the Exchequer Secretary to the Treasury, David Gauke, to work to improve the legislation.

IR35 legislation and the upcoming Agency Workers Regulations are still causing headaches for contractors and freelance workers, which has led to the government announcing plans to review employment law.

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

Over this 5 and half year battle with HMRC Ms Richardson was facing a tax bill of over £50,000; but through her legal representatives, Accountax Consulting, it was successfully argued that she was not an employee and that she was genuinely self employed, operating through her limited company.

The Tribunal found that “it is clear to us that ECR is a genuine business and therefore not a target of the IR35 legislation”. Matt Boddington, of Accountax Consulting, spoke about the case saying;

“What is particularly pleasing about this judgment is that the Tribunal had their commercial heads on and understood that contracting through a single person limited company is a prudent and sensible method of providing freelance services, and not about disguising employment.”

This is another positive step for contractors affected by the legislation, and comes during a week in which the Exchequer Secretary to the Treasury, David Gauke, committed to improving IR35.

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, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

HMRC have claimed that although they are placing additional burden on business with this new BRC initiative, in terms of costs and time, they believe the long term benefits will outweigh these issues as it will lead to business keeping better records in the future. They have also confirmed that this trial period will not incur any penalties.

Tax advisors Smith and Williamson have warned business to keep full records from up to six years back to be safe and in order to comply with HMRC’s standards. Richard Mannion, national tax director of the group, said; “This new approach heralds a sharply toughening attitude to SME record keeping by HMRC.”

“Business owners should take these warnings very seriously. If they don’t keep good records, they may be unable to substantiate tax returns and so would have difficulty in proving their figures are correct. They could therefore end up with an extra tax demand and even a fine.”

This comes as HMRC announce plans to hire over 1,100 temporary workers to help chase unpaid tax bills. Around 1.4m people were sent tax demands for over £3.8bn last year as HMRC had problems with the PAYE tax system and made errors with millions of tax bills. This is the latest move into trying to improve HMRC efficiency.

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. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

UCATT disputed claims from the REC that construction workers choose to be self-employed; claiming that HMRC guidelines state that employment status is ‘not a matter of choice’. They have also criticised the use in some circumstances, of the CIS scheme.

REC’s Director of Policy, Tom Hadley, stated that “The idea that agencies are routinely coercing workers into declaring themselves self-employed is wide of the mark.” He continued;

“The nature of work in the construction sector means that permanent full time employment models are never likely to be the norm. Where there is a flexible workforce, law abiding agencies have a crucial role to play in ensuring that workers are looked after and that regulations are properly applied. Having the support of an agency is in most cases preferable to working directly with end users as an individual limited company.”

Simon Noakes, of the REC Construction group, agreed and added that specialist recruitment agencies help give construction companies the support and confidence to deliver large scale projects.

“Recruitment agencies specialising in construction within the REC work hard to raise standards and to provide a first class service to employers and contractors. We fully support the effective enforcement of existing regulations.”

This is not the first time that the REC and UCATT have spoken out about issues in the construction sector, after debate about the legitimacy of self employed construction workers back in January. The REC, however, have always highlighted the value they place on contractors and their willingness to work with groups such as UCATT. Mr Hadley finished saying;

“We believe that UCATT can play an important role in actively promoting the positive contribution that compliant agencies can make. We are keen to discuss this further and have already asked UCATT official to meet and discuss wider issues of the construction industry.”

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 CIS service. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.