Important factors in this IR35 decision
When contractors can make it clear that they control their own businesses and that they make their own hours, and take holidays at their discretion, they can win IR35 cases.
The Emsworth, Hampshire-based First Word Software Ltd. , a specialist in the migration of human resource and payroll systems, has just beaten down an attack by HMRC. First Word Software was successfully represented by Matt Boddington of the Milton-Keynes-based IR35 consultants Accountax Consulting,
Neil Atkins, managing director of First Word, contracted through a Weybridge, Surrey agency called Plexus Personnel with the London-based news agency Reuters Ltd. in 2000 to supply such services.
There was no question about the contractor deciding how the work was to be done
Matt Boddington-Accountax Consulting
Control
Atkins determined the hours worked, and often worked either on the train (commuting to and from Reuters' offices) or from his own home office. Atkins received no holidays from Reuters, and indeed, Atkins decided for himself when to go on holiday or to take leave. ''This was an important factor in the decision,' says Matt Bodington, who defended the case for Accountax. ''It was clear that Atkins was in no way subject to decisions by Reuters management regarding his time.
Further, as the judges noted, Mr Atkins was engaged for his specific expertise and was engaged only for a particular project. ''There was no question that Atkins' method of work should be his own,'' Boddington points out. The contractor was, as Atkins told the court, a small piece in a large jigsaw,'' and there was no hierarchy from Reuters to which Atkins answered. The evidence was that Mr Atkins was engaged to provide a link in a large chain, and the way in which that was done was left to him. Although Reuters decided the thing to be done, (namely the migration of the legacy computer systems) Mr Atkins decided the way in which the migration of the human resource and payroll systems was to be undertaken.
Mutuality of Obligation
It was also clear, the judges found, that Atkins only received remuneration for work done on this specific project. Had Atkins not been able to work on this project, Reuters would not have found other work for Atkins to do. ''The client were under no obligation to continue to make work available for the duration of the agreement,'' says Boddington.
It was clear that the contractor was in no way subject to the client with regard to working hours
Matt Boddington-Accountax Consulting
Financial Risk
First Word Software was also plainly in business on its own account, and faced financial risk in completing the contract for Plexus Personnel and Reuters. At times Plexus Personnel was late with payments, and Atkins had to finance these periods. At other times, Atkins made investments in First Word. Equally important, Atkins brought his own expertise and property rights to the work at Reuters. And Atkins found work with a number of other companies after the work at Reuters.
These issues built a strong case for First Word Software, and HMRC, which trotted out the usual arguments, could not provide significant proof for them. All of which goes to show that businesslike contractors, who run their own businesses, have little to fear from IR35.
Published: Thursday, January 24, 2008
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