Two high profile IR35 appeals involving TV personalities are scheduled for the courts next year. Tribunals play an important part in evolving employment status case law, as the IR35 legislation fails to supply the definition of an employment relationship. As the date for IR35 reform on April 6th approaches, these tribunals take on increasing significance in demonstrating how the key status tests apply to both the written contract and the daily working practices of independent workers.
The cases of Holmes and Adams mark an increasing tendency to dispute first-tier tribunal outcomes, perhaps as the contributing factors in determinations become more complex and arbitrary. With HMRC keen to set a precedent for the new reforms, they’re appealing Adams’s victory, which saw her walk clear of a £125 tax bill back in April.
The appeal follows HMRC’s successful overturning of radio presenter Paul Hawksbee’s victory, leading many to believe they were emboldened by the win. However, the appeals process works both ways, and presenter Eamonn Holmes, who presents ITV’s This Morning, will reportedly challenge an FTT ruling that he owes £250,000 in unpaid tax.
Recent IR35 cases have also seen a shift away from emphasising single contractual clauses such as right of substitution, and towards a more holistic approach. The tests of MoO and Control are increasingly used to drill down into the daily working practices of contractors when establishing the nature of their working relationship with the end-client.
Such is the difficulty in weighing all contributing factors, several first-tier tribunals have resulted in a split panel, leaving the judge with the casting vote. FCSA chief executive Julia Kermode commented on the Hawksbee case: “Given that the two tribunal judges took opposing views, this case illustrates how unfair it is to expect businesses to make IR35 determinations in the light of off-payroll legislation due in 2020.”
HMRC’s win back in Feb 2018 against Christa Ackroyd was the first case they had won in 9 years, leaving many to question whether they understood their own legislation. This was also highlighted by HMRC leaving MoO out of their online CEST tool, based on their assumption that it was automatically present in any contract by virtue of an ‘irreducible minimum’. This interpretation was shown to directly conflict with the courts understanding of employment law.
Despite the Lords report finding many issues within the legislation, these remain largely unresolved as the deadline for reform approaches. The lack of a standardised interpretation of IR35 warns of the likely confusion ahead as private sector firms attempt to reach reliable status conclusions. This only increases the probability of more blanket decisions that automatically classify contractors as inside IR35 or ban the use of limited companies in order to avoid IR35 risk.
What’s important is that contractors act now to ensure that they are protected from the fallout of reform. Amaze Umbrella’s service has undergone rigorous assessment to attain FCSA accreditation, giving you a fully compliant IR35 solution. Our service also offers benefits of employment that permanent staff receive as well as Perkbox* benefits, insurance cover and a seamless onboarding experience from our first-class customer service team. To speak to a member of the Amaze team see here.
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