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IT consultant wins "stressful" IR35 case

Sally Howitt an IT Consultant and director of AbFab Ltd has been under investigation for almost 3 years and, not surprisingly, this has been a very stressful experience.

Sally said "my message to anyone finding themselves in this situation is not to give in. I have always run a professional business and believed that I was outside IR35. It has been a very long, stressful hard slog but with the right advice my case is now won and I can put this behind me."

After our attention has been turned to S660 with the recent high profile Artic Systems case, Bauer & Cottrell point out that IR35 has not gone away.

There are many hundreds of IR35 status cases currently being defended and we have no doubt there will be many more to come not least because the Revenue has announced an increase in status resources of 50% from April 2004 - that's now!

Legal experts indicate that most IR35 cases start with an Employer Compliance Review by the Inland Revenue. Some start as part of an aspect enquiry or full investigation by Revenue Inspectors.

Bauer & Cottrell have many years experience of defending status cases and warn that for the last 6 months many cases have started out as an IR35 investigation and quickly turn into an investigation under Section 660 as well.

It is therefore absolutely vital that Contractors seek professional advice at an early stage and ideally before they start their first contract.

Roger Sinclair, Egos, confirms "The test for whether a contract is (and always has been) within IR35 or not depends on the question of whether or not the individual would be regarded as an employee of the client, were the contractual relationship direct.

"Thus, the actual nature of the real world relationship - ie what in fact goes on day to day - is a key factor. But the statute expressly provides that the circumstances to be taken into account in looking for the answer to that question include the terms of the contracts forming part of the arrangements.

"So it follows that the terms of the contract must always be taken into account, and I have to say that it is a mystery to me why the Revenue on this occasion seem to have felt they could be ignored.

"No one can decide employment or IR35 status without taking into account the underlying legal responsibilities and obligations accepted by each party, and there are many situations where those underlying legal responsibilities and obligations may be wholly inconsistent with an employment-type relationship. Provided those underlying matters represent a genuine structuring of the legal relationship in a particular way (ie provided the parties do genuinely intend the document to have the effects for which it provides), then those underlying matters cannot be disregarded, and can often carry the day."

Nov 4, 2004
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