By Andy McCue, 4 November 2003 17:00
NEWS The Professional Contractors Group (PCG) has won the latest round in its long-running IR35 battle with the taxman.
One of its members, Roger Tilbury from Bedford, won his case against the Inland Revenue at the Special Commissioners when the judge concluded that he should not be classed as an employee of Ford Motor Company for tax purposes.
The Inland Revenue had brought the case against Tilbury, arguing that he was a 'disguised' employee of Ford, even though his contract was actually with Compuware, to which the car firm had outsourced its application management centre.
The judge, Mr Stephen Oliver QC, took several factors into account in his nine-page judgement. These included the fact that Tilbury Consulting Limited had the "qualified right" to send a substitute but had never exercised this, that it was not the manager at Ford's function to tell Tilbury how to do the work, and that Tilbury had a different colour pass from the Ford employee one which did not entitle him to company benefits such as use of the gym.
Tilbury said in a statement after the case: "I'm delighted to have won, and relieved that it's over. It has taken more than two very stressful years to get to this point, during which time I had to put all investment in my business on hold, for fear of tying up funds."
PCG chairman Simon Griffiths said in a statement he was pleased with the judgement because it re-establishes the core principles of defining an employment relationship based upon the actual contract.
"Furthermore, it recognises even a fettered substitution clause as being inconsistent with employment, despite never having been exercised. Roger has been working for the same end client for nine years, being paid by the hour, and it's encouraging to note that the issues of control and substitution were deemed more important in determining his employment status," he said.
Just last week the Inland Revenue blamed contractors for the length of time it is taking for some IR35 cases to be resolved.
Comments
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1. anonymous
Nice to see the one-man band limited company getting one over on the Revenue. It's about time! PCG, keep up the good work!
2. anonymous
I think that it is about time that the freelance community were treated the same as their fully employed colleges, instead of second class citizens. We currently have to pay both employers and employees National Insurance, employees and employers liability insurance, professional indemnity insurance. The are no rights to sick pay, paternity leave or holiday pay. We have no rights to the facilities offered to the company employees such as non contributory pension schemes, discounts for canteen, gyms, interest free loans for season tickets, free parking, free training.
If our contract is terminated, we have no rights to Unemployment benefit, Housing benefit, Mortgage protection, or any other type of credit protection.
We pay more tax than any other section of the community and on top of this we also collect tax free of charge for the government via VAT. It is enough to drive anybody abroad. Asta Lavista Tony.
3. Rob Young
Good to see the control freaks in HMG getting squashed. They'll be back as they don't live in a world where you take responsibility for what you do at all times. Hope there is another prepared to take them on next time.
Good on him
Rob Young
4. Richard Cranium
Its about time IR35 was scrapped! It does not help anyone. Its probably costing the Govt more money than they are pulling in!
5. anonymous
IT Contractors need to realise that their elitist gravy train has to stop. What is the difference between an IT contractor and an office temp? Both have their jobs lined up by agenencies and have little to account for other than their time. One gets a large pay cheque and the ability to 'play' the tax system, the other doesn't. They can start calling themselves companies when they need to tender for contracts and commit to real deliverables other than their time. What percentage of so called companies have seperate business premises and employ people other than friends or members of their own family. I know someone's mother who gets quite a salary from their son. A blatant tax dodge. Good luck to the Inland Revenue!!
6. anonymous
IR35 was long overdue - the contractors had been taking the p*** too long. The problem is, the government took it too far - training etc should come out before tax, but take a look around your office, who is it owns the very latest laptops/phones/PDAs etc - either bosses or contractors (who get this stuff half-price compared with the rest of us, who have to pay income tax and VAT).
The upshot is, for someone to take home the same money (after tax), the IR should receive the same payments. This would allow your one-man-band to save some cash in the company to pay for holiday/sick pay etc.