IR35 tribunal sees Nationwide IT contractor lose second allure in opposition to £70,000 HMRC tax bill

An IT contractor who got an IR35-connected £70,000 tax bill by HM Revenue & Customs (HMRC) has had his allure referring to the case pushed apart by a tribunal capture for a second time.

Project manager Robert Lee got a £70,000 tax put a question to when it comes to a series of IT-connected originate air IR35 contracts he executed for Nationwide Building Society between 2012 and 2015, delivered by his restricted company Northern Lights Alternate choices.

Nonetheless, HMRC claims the design in which Lee labored with Nationwide supposed his engagements must maintain been labeled as inside of IR35, making him at chance of pay the same National Insurance Contributions (NICs) and Pay-As-You-Make (PAYE) tax as a everlasting employee would.

Lee within the muse attempted to self-discipline HMRC on the topic by a First-Tier Tribunal in February 2020, nevertheless his allure became pushed apart. He became then granted permission in July 2020 to hotel one other allure, which lead the design in which for a two-day Upper Tribunal listening to in Would possibly presumably well well additionally 2021.

The tip result of that listening to has now been made public, with the Upper Tribunal capture confirming this second strive at an allure by Lee has also now been pushed apart on various grounds, including the high ranges of defend watch over that Nationwide had over how Lee labored one day of his engagement.

One other reason why the allure became pushed apart is attributable to the tribunal disputed the reveal that Lee had a exact appropriate of substitution, which is concept of a key determinant of whether a contract is originate air IR35 or now not.

In an originate air IR35 context, contractors must tranquil be ready to veil that their quit-client is now not entirely reliant on them to reveal the providers and products they’re being reduced in dimension to provide and that a exchange with the same abilities, and ride may maybe additionally be appointed and step in if wished.

Evidence shared within the tribunal notes suggests it may in point of fact maybe maybe maybe now not be viable for Lee to “ship one more person to attain the work” attributable to they would now not “earn by security, they do now not maintain a notebook computer nor recordsdata of the work. The actuality became that it became now not going to happen.”

Dave Chaplin, CEO of contracting authority ContractorCalculator, has described the quit result of the ruling as “a bit unfair”, and said the quit result appears to be like to be all of the design in which down to an absence of workmanship by the tribunal judges about the actuality of working on an IT mission.

“Lee’s contract did embody a legitimate unfettered appropriate of substitution, nonetheless it became in no design exercised, and the consumer in no design gave seek evidence to support it up as a exact appropriate,” said Chaplin.

“The judges selected to push apart those substitution clauses. Substitution isn’t any silver bullet to definitively proving a employee is now not employed except it has taken web page.

“Whereas I in point of fact maintain some misgivings about one of the vital most conclusions drawn, the law appears to be like to be as it’ll be utilized,” he said.

“Nonetheless, many firms are one-man bands and bring their providers and products in my concept. But that by myself would not suggest they’re all employees.”

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