Contractor gains IR35 "victory"

Date: 20th August 2009

A long-running dispute between HM Revenue & Customs (HMRC) and an IT contractor over whether or not to apply IR35 has been resolved.

The contractor has won a "victory" over the taxation authority after five years of disagreement, the Professional Contractors Group (PCG) said.

At issue were the nature of the services offered by the professional to the main client.

The dispute continued despite the fact that the company in question had stopped trading.

Eventually, the contractor resolved the case by enlisting the services of a tax adviser - who then contacted HMRC and informed them about the true nature of their client's relationship with the firm.

The tax authority then said that they would cease their enquiries.

PCG commented: "This case demonstrates the fundamental importance in arguing IR35 enquiries forcefully and applying the pressure on HMRC.

"Over four years worth of distress and painstaking delays for the PCG member neatly tidied up within nine months, simply because the pressure was put on the inspector to reply to all points, on time."

IR35, introduced by the government in 2000, is legislation designed to limit the avoidance of tax from employees of companies.

Common disputes relating to these laws stem from whether or not a worker is on the payroll of a firm or not.