Contractors lose Island Consultants Ltd IR35 case to the revenue

IR35 Test

In a reversal of consistent successes for contractors in IR35 cases at the Special Commissioners, a recent ruling has resulted in a firm losing it's IR35 case.

An Unusual Move

The involved the firm Island Consultants Ltd who were represented by Milton-Keynes-based consultancy Accountax. The Special Commissioners have found that the company is indeed within IR35. written decision was published yesterday confirming the terms of the decision, which is currently sub judice (see Island Consultants Ltd v Revenue & Customs. Expert analysis will follow.

No Appeal Planned

Dave Smith, director of Accountax, told ContractorCalculator that the firm did not intend to appeal. ''My only comment arising from the case is that IR35 appeals will always come down to evidence on the day,'' Smith says.

The case goes back about four years when the Revenue took exception to Island Consulting's long relationship with a single client.

Accountax is an approved PCG supplier and has, until now, never lost an IR35 case. The legislation regarding IR35 has in fact been disastrous from the point of view of the Revenue, which has lost the vast majority of cases that it has attempted to contest. Accountax had never before lost a case of this kind.

My only comment arising from the case is that IR35 appeals will always come down to evidence on the day

Dave Smith-Accountax

As yet, Island Consultants Ltd have been unavailble for comment regarding the decision.

In fact, in tax investigations completed by PCG's approved suppliers as of 17 July 2007, the PCG suppliers have won 1427, and the Revenue has won only 4.

IR35 Doesn't Work Well

The complexity and vagueness of the original IR35 legislation is much to blame for this state of affairs. The Chartered Institute of Taxation, an independent agency which is relied upon by the Government in fiscal matters, is calling for a full-scale review of small business taxation, with particular reference to this kind of issue, and it is possible that the Government will undertake a revision of IR35 in the coming year.

Approved PCG suppliers have won 1427 IR35 investigations and the Revenue has only won 4

PCG

Earlier this month, the Government admitted that the enforcement of the Intermediaries Legislation (IR35) – had been ''patchy.'' The House of Lords Economic Affairs Committee Report on the Budget in July also severely criticised the effectiveness of the IR35 legislation, and called for a new look at contractor taxation.


Alliance Accountants

Published: Friday, July 20, 2007

© 2014 All rights reserved. Reproduction in whole or in part without permission is prohibited. Please see our copyright notice. If you want to use any content you have seen on this site then please request our media pack and ask for details of our Content Licencing Service.

Inni Accounts


Readers Comments...


  
Bookmark and Share
  
     
  

Latest Site Updates

Contractors to benefit from a “louder, stronger voice” as PCG rebrands to IPSE Contractors to benefit from a “louder, stronger voice” as PCG rebrands to IPSE

Contractors will be “impossible to ignore” with a “louder…voice”, as PCG rebrands to the Association of Independent Professionals and Self-Employed.

ContractorCalculator: Contracting news in brief – 29/Aug/2014 ContractorCalculator: Contracting news in brief – 29/Aug/2014

News this week covers: economic growth generates contracts; Scotland’s tax laws; construction skills shortages; ISO9001 survey; & HMRC payroll fines.

Guide to debt recovery using High Court Enforcement Guide to debt recovery using High Court Enforcement

Contractors can use High Court Enforcement as a debt recovery strategy when clients with assets won’t pay, says Burlington Group’s Ross Crawford.

Why real income tax rates are not progressive for many taxpaying contractors Why real income tax rates are not progressive for many taxpaying contractors

Contractors with children and earnings of over £50,000 per year, and those earning over £100,000 a year, are just not paying progressive rates of tax.


  
  

Twitter

Follow Us On Twitter


  
     

  
  

Contractor solutions

Orange and Gold Accountancy Limited IR35 Test Clever Accounts Accountants Checklist Alliance Accountants Contractors Handbook
  
  

Contractor solutions

Parasol

The UK’s largest employment organisation - 0% risk, 100% compliance

Need an accountant?

Comprehensive service for £59 per month. Call now for a FREE consultation.

Clever Accounts

Complete contractor accounting service. 24/7 online access. £69 pm!

Contractor Accountant

Free consultation, incorporation and IR35 reviews. Find out more…

Contractor Angels

More than just an Umbrella. Retain up to 90% of your earnings.

InTouch Accounting

Perfect mix of technology & personal service for only £92 per month.

NA Bedouin Group D J Colom Accountants Contractor Financials NewsNow
  
Caprica Accountants Contractor Insurance Life Insurance

  

The UK's leading contractor site. Independently audited traffic (ABC) – 131,456 monthly unique visitors.