HMRC and IR35

IR35 legislation is again under the spotlight with yet another HMRC IR35 case being won by a contractor.

An engineering contractor providing services through his limited company Marlen Ltd, had contracts with two divisions of JCB. HMRC argued that, despite working on these contracts, Mr Hughes was seen to be similar to a senior employee of JCB.

The legal firm Accountax Consulting, who have represented contractors previously on behalf of the PCG, argued on behalf of Marlen Ltd that IR35 legislation did not apply in this instance. This was agreed with by the tribunal, with Judge Lady Mitting confirming their findings.

“We have considered two factors – mutuality of obligation and control. These are the two factors which make up the irreducible minimum required to demonstrate a contract of employment.”

“It is our conclusion that there is no mutuality of obligation and the degree of control which would have been needed to establish a contract of employment just did not exist.”

The lack of this ‘mutuality of obligation’ as well as other factors which made it clear that work was determined by conditions of the contract showed similarities to the previous case of MBF Design Services Ltd.

This recent set-back for HMRC has placed further pressure on the IR35 Forum’s ongoing work to bring a clearer and more straightforward solution to the current legislation although with AWR almost upon us this could be some way off.

Inspired recruitment work with a number of trade bodies as well as experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the aforementioned AWR. You can contact us now for more information or visit our candidate zone.