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IR35 Court Cases: History of all cases and references to judgments

Interested in the IR35 court cases? We list every single one here together with a downloadable copy of all the court judgments.

The Intermediaries Legislation is Chapter 8 of ITEPA, enacted in April 2000. This is commonly referred to as “IR35”, but confusingly “IR35 status” is also used to refer to whether someone is considered a “deemed employee” based on applying employment status case law.

Under Chapter 8, the contractor must assess their IR35 status. If they consider the IR35 rules apply to them (inside IR35) then they have to treat their income as if it was the entire cost (including employers NI) of them being hired. This is different to the new off-payroll tax - see later.

The dividend tax changes in April 2016 now mean that a contractor pays roughly the same amount of tax on their income as an employee does on their salary. The vast bulk of perceived avoided tax is avoided by the hirer. About 84% of it. This is why the off-payroll tax (Chapter 10 of ITEPA, live from April 2017) is different.

With the off-payroll tax, there is the concept of a “Fee Payer”: This is the agency if there is one. Otherwise it is the client. The client must assess the IR35 status of the contractor. The Fee Payer must then pay over all the taxes if they are inside IR35 by treating the contractors earnings as salary. So employers NI must be paid on top of the contractors earnings (which is called the “Deemed Direct Payment”). Then, just like salary, PAYE and employees NI is deducted from the contractors earnings. If the contractor is wrongly processed as outside IR35, then the fee payer is liable for the tax, not the contractor.

The IR35 court case history

In the early days of IR35 HMRC attempted to classify many contractors, particularly in IT, as "deemed employees", but they had very little success. In over a thousand cases HMRC gave up the fight before reaching court.

In the last ten case decisions, since April 2010 they have only fully won 1 case out of 10 - just a 10% win rate. This is against the backdrop of HMRC claiming that there is widespread non-compliance with the rules. If that's the case, then why aren't HMRC winning cases?

HMRC's win in Feb 2018 against Christa Ackroyd was the first case they had won in 9 years, since the Larkstar Data case.

HMRC’s Litigation and Settlement Strategy (LSS) states (Page 7) "where HMRC believes that it is unlikely to succeed in litigation it will, in the majority of cases, concede the issue". If HMRC are not litigating in a reasonable manner they should be winning at least half of cases. In more recent times this does not appear to be the case. They are only winning 10% of them.

List of IR35 court case decisions

Date of case Date of decision Name of case Who won?
03 Aug 2001 12 Sep 2001 Battersby v Campbell HMRC
01 Dec 2001 22 Jan 2002 F S Consulting Limited vs McCaul HMRC
01 Oct 2002 01 Oct 2002 Lime IT vs Justin Contractor
27 Feb 2003 28 Mar 2003 Synaptek vs Young HMRC
15 Aug 2003 03 Nov 2003 Tilbury v HMIT Contractor
01 Jan 2004 08 Oct 2004 Usetech vs Young (inc High Court) HMRC
01 Mar 2004 29 Jul 2004 Ansell Computer Services Contractor
23 Mar 2004 22 Oct 2004 Future Online (inc High Court) HMRC
15 Dec 2004 17 Jan 2005 Netherlane Limited HMRC
28 Jun 2007 05 Jul 2007 Island Consultants Ltd V Revenue & Customs Contractor
23 Jul 2007 20 Dec 2007 Datagate Services Ltd Contractor
20 Sep 2007 11 Dec 2007 Dragonfly Consulting Ltd HMRC
26 Sep 2007 11 Dec 2007 MKM Computing Ltd HMRC
01 Nov 2007 11 Dec 2007 First Word Software Ltd Contractor
22 Jan 2008 19 May 2008 Alternative Book Company Ltd HMRC
24 Nov 2008 15 Jan 2009 Larkstar Data HMRC
08 Dec 2009 06 Apr 2010 Novasoft Contractor
15 Nov 2010 05 Jan 2011 MBF Design Services v HMRC Contractor
10 Jan 2011 24 Jun 2011 Marlen Ltd Contractor
17 Feb 2011 11 May 2011 ECR Consulting Contractor
12 Apr 2011 06 Jul 2011 Primary Path Ltd Contractor
24 Oct 2011 28 Nov 2011 JLJ Services v HMRC Split case
15 Nov 2016 27 Jan 2017 Armitage Technical Design Services Limited Contractor
26 Sep 2017 14 Feb 2018 Christa Ackroyd HMRC
04 Oct 2017 16 May 2018 Jensal Software Limited Contractor
08 Nov 2017 19 Mar 2018 MDCM Ltd Contractor

To download a copy of the all 26 court judgments (536 pages), click here.

Published: 15 August 2018

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