PCG support helps contractor to only the second IR35 win
In the latest IR35 case to be heard before the Special Commissioners, a contractor, Roger Tilbury, has succeeded in establishing that IR35 did not apply to the arrangements between his company, Tilbury Consulting Limited and his client, Ford. This is only the second IR35 case to be won by a contractor against the Revenue at the Special Commissioners - the first being Lime IT.
This is great news for Mr Tilbury and demonstrates the important role that the PCG plays in supporting its members. After 28 months of protracted arguments, Mr Tilbury has persevered where others may have given in. This reinforces the importance of putting in place appropriate measures as early as possible to prevent the stress and time of protracted dealings with the Revenue.
The key indicators that the Special Commissioner found in favour of IR35 not applying were the lack of control exercised by Ford over Mr Tilbury's work and the lack of a requirement for the personal services of Mr Tilbury in the performance of the work. However, the way the Revenue presented its arguments contributed to its loss of the case because it did not initially appreciate the role that Compuware played in the arrangements between Mr Tilbury and Ford. Had they properly considered Compuware's management role of Ford's Application Centre then they should have claimed that Compuware was the client and not Ford. If this was argued then the facts of the case would have had more in common with those in the Synaptek case, where the Revenue successfully established that Mr Stutchbury was engaged in a manner akin to employment by EDS, who was managing the provision of services to the Benefits Agency.
Adrian Marlowe, director of the specialist adviser Lawspeed, said "Whilst this result is excellent news for the contractor concerned and again underscores the principle that contractors can operate outside IR35, the fact that the Revenue appears to have made a significant error does still leave questions open. However, it does provide some clear points for contractors and their advisers to consider for the future and proves that membership of the PCG is definitely a useful investment. Best advice must still be that contractors use their PCG membership, and also take proper advice before entering into arrangements ensuring that they have strong commercial contract terms that accurately reflect the work. If the Revenue does attack real protection is then in place. The stress of dealing with a Revenue investigation and a hearing before the Commissioners cannot be overestimated, and so it is best to avoid problems in the first place."