Having inspected the contractor in September 2002, and despite representations from his accountants, the Inland Revenue concluded that he was caught by IR35.
When he approached us for an appraisal, we advised the contractor that in our opinion he was not 'caught', as the Inland Revenue had considered only a sub-set of the full evaluation criteria. We presented the case again, citing the relevant case law, and the Inland Revenue reversed the decision.
In light of the recent IR35 ruling at the High Court, which went against IT contractors (Stutchbury/Synaptek), it will be a relief to many that decisions can be reversed.
This contractor has spent 12 years contracting with various clients, including Hewlett Packard. For the last three years, since the implementation of IR35, he has paid an extra £17,000 per year in taxes due to IR35. He is however not working as an employee of HP, nor has he ever intended to. He regularly works over 50hr weeks, and his company is contracted through an agency.
Another notable point was that the contractor did not have business insurances in place prior to the investigation, though this has now be addressed.
The Inland Revenue initially only explored the levels of supervision and control, number of hours worked, insurances in place, training, and whether or not personal service was required. They also assessed the contract in place between the personal service company and the agency.