Introduction
Case law is used to determine the IR35 status of a contractor as either employed (inside IR35) or self-employed (outside IR35).
This article explains what case law is, and provides some guidance for finding further more detail information about specific cases.
What is Case Law?
Definitions from Duhaime:
If a rule of law cannot be found in written laws, lawyers will often say that it is a rule to be found in "case law". In other words, the rule is not in the statute books but can be found as a principle of law established by a judge in some recorded case.
A basic principle of the law applies whereby, once a decision (a precedent) on a certain set of facts has been made, the courts will apply that decision in cases which subsequently come before it embodying the same set of facts. A precedent is binding and must be followed.
HMRC, IR35 and case law
From the HMRC leaflet IR56:
“The law for tax and social security legislation does not define ‘employment’ and ‘self- employment’. But, over the years, the Courts have considered this issue and their guidance on whether an individual is an employee or self-employed is known as case law.”
How should a contractor use case law?
A contractor would not be wise to try and learn all the IR35 case law, and employment law, with a view to ‘doing it on their own’.
Firstly, this would be a huge task costing a great deal of time and is best left in the hands of professional lawyers.
Secondly, as a novice ‘lawyer’, trying to combat status disputes with HMRC significantly reduces your chance of success.
However, what is useful is for a contractor to have a good overview of the process of mitigating the IR35 risk, and knowing when to get professional help.
The following articles are recommended reading:
- When should contractors start considering IR35
- How to Determine if Your Contract Passes IR35
- Negotiating Your Contract for IR35 Compliance
- IR35 insurance – cover yourself with contractors’ tax investigation cover
Case law applicable to IR35
This section is more applicable for those wishing to dive into the detail of the case law.
HMRC:
They have published the case law section of their employment status manual on their site.
Bear in mind that not all these cases are directly applicable to IR35.
Lawspeed:
Overview of background case law, including:
- Express & Echo Publications v Tanton [1999]
- Carmichael v National Power Plc [1999]
- Smith & Chanton Group v Costain Ltd [1999]
- Chen Yuen v Royal Hong Kong Golf Club [1998]
- McManus v Griffiths [1997]
- Hall (Inspector of Taxes) v Lorimer [1994]
- McMenamin v Diggles [1991]
- O'Kelly v Trusthouse Forte Plc. [1983]
- Swan Hellenic Ltd v Secretary of State [1983]
- Massey v Crown Life Insurance Co. [1978]
- Ready Mixed Concrete Ltd v. Minister of Pensions & NI [1968]
- Market Investigations Ltd v Minister of Social Security [1968]
Detail for IR35 Cases, including:
- Synaptek v Young (2003)
- LIME IT v Justin (2002)
- FS Consulting v McCaul (2001)
- Battersby v Campbell (2001)