Usetech Limited loses IR35 appeal

Bill Hood started his business as an oil rig designer in 1996, abandoning it last year after suffering a severe heart attack. The first hearing of his case, by the Special Commissioners, took place in the living room of his Gateshead home, rather than in a courtroom. He did not attend the High Court appeal in London. His case has been supported throughout by PCG's legal fund.

Commenting on the outcome, PCG chairman Dr Simon Juden said, "Once again we witness the lottery of running a small business. In this case, Bill had negotiated his contract for services with the agency, but for reasons of commercial confidentiality, had not seen the 'upper contract' between the agency and the end client - a quite normal state of affairs. The size of his tax bill was found to be dependent on a document that he had neither signed nor seen. This surely offends common sense."

This decision comes in the wake of last week's judgment regarding the Arctic case, a Section 660 case also funded by the group and in which two highly expert commissioners of tax were unable to agree the tax bill of another very simple business. As a matter of urgency, PCG is calling for greater clarification and consistency in tax rules. "Yet again, confusion reigns for small businesses," said Dr Juden. "How are small business owners supposed to determine their tax liabilities when factors they not only do not control but aren't actually allowed to see dictate how much tax they pay?

"It is extremely unfair and unreasonable that people who choose to run their own businesses should have to face constant uncertainty about where they stand in relation to their tax," he continued. "These businesses play an important part in the in the local and national economies, but the lack of consistency on tax matters is a distinct disincentive that can only be bad for Britain in the long term. Surely it cannot be right that these simplest of businesses face such staggering complexity and uncertainty in their taxation."

Friday 8th October 2004