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Selective Memory Tactics of the Inland Revenue – 'Case Study'
What started off as an Employer Compliance Review (ECR) quickly moved into an IR35 investigation with an innocuous question directed to the accountant of "Has your client considered the implications of the IR35 legislation upon his business"? The consultant was referred to Qdos Consulting on the recommendation of his accountant who had been dealing with the ECR. Qdos commenced with a full review of the consultant's contracts for providing IT networking/software services in the development and maintenance of commercial systems. The consultant was also asked to obtain confirmation of the working practices to boost his case against the Inland Revenue. Documents and additional information were provided to the Inland Revenue, which contained clear evidence that the IR35 legislation did not apply to six consecutive contracts over a three and a half year period. The main points in the consultant's favour, but by no means all, were: The Inland Revenue's response was to disagree with the Qdos view upon the 'substitution' position, and nothing else. The Inland Revenue's tactic was to quote the tax case, Synaptek v Young, using the underhand method of quoting Mr Justice Hart, but selectively removing specific words (the misquote definitely being in their favour). Needless to say that this error was pointed out to the Inland Revenue who then dropped the point, moving on to previously forgotten issues (whatever happened to whole case working?). Finally, after answering more questions, for which information had already been provided Qdos received a letter stating that 'the Status Inspector is satisfied that your client's contract is outside the scope of the Intermediaries Legislation (IR35)'. No reasons or explanations were given. When advised of the outcome the Director of the client company was, needless to say, extremely pleased and grateful to Qdos for the successful defence of his IR35 case. To date Qdos have handled over 600 IR35 cases saving millions of pounds in tax and are the UK's leading specialist on IR35 and Status Compliance issues. Qdos Freelancer Tax Protection insurance will cover the cost of representation by a Qdos tax specialist in the event of a PAYE compliance visit and an IR35 status enquiry for just £99 per annum including IPT. Purchase Qdos Freelancer Tax Protection. Added to site on 20/10/04 |
This 'case study' highlights the levels the IR are prepared to go to when pursuing contractors under the IR35 legislation and their selective interpretation of a well-documented case.