IR35 caught contactor wins holiday pay from HMRC

[Guvernator]

I really think you're missing the point.

I agree with what you're saying in principal, but the facts are that she was placed under a 'blanket inside IR35' decision by her client, after being considered outside. She can't fight the IR35 decision in court unless HMRC take her to court for previously unpaid IR35 taxes, which are absent in this case.

What she has proven is that a client can't make an IR35 determination without the consequences falling on them, which, from a freelance perspective, has to be a good thing.

imagine your client does the same to you. Yesterday, you're outside IR35 and today you're in, with no other changes to your contract terms or remuneration. What's your next move ? Walk ? (fair enough, that's what I'd have done, but it's not for everyone). Make the client face up to the responsibilities behind the decision THEY made ? Seems fair to me.

This case would seem to suggest that she did in fact have another way to argue her case.

https://www.contractoruk.com/forums/...ay-hmrc-7.html

I just don't think contractors suing for employment rights is the right way to fight IR35 in the long term.

[DaveB]

This case would seem to suggest that she did in fact have another way to argue her case.

https://www.contractoruk.com/forums/...ay-hmrc-7.html

I just don't think contractors suing for employment rights is the right way to fight IR35 in the long term.

He took the agency to court for unfairly deducted employers NI, as having been declared an employee he should not have been liable for that but the agency deducted it from his rate anyway.

As a side effect the judge threw out the CEST assessment carried out by the client by ruling him to be self employed. This was not because CEST was flawed, but because the client didn't enter the correct information based on his actual contract.

So yes, it does give another avenue to challenge but still relies on claiming employment status via tribunal. You'd have to be under the same circumstances as Elbourne, ie having employers NI deducted unfairly in order to bring the challenge. The case hinged on whether he was an employee or not which determines liability for employers NI. The agency that he brought the claim against actually tried to argue that he wasn't despite the client assessing him as inside IR35.





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[Guvernator]

I actually think the employers NI thing is the bit that's worth fighting over, not employment rights. Companies make big savings by not paying employers NI when you work through a Ltd company, if you are deemed an employee they shouldn't still be passing this onto you but it seems most will try to.

This IMO is a much more pertinent and effective way of fighting IR35 then arguing over employment rights.

[DaveB]

I actually think the employers NI thing is the bit that's worth fighting over, not employment rights. Companies make big savings by not paying employers NI when you work through a Ltd company, if you are deemed an employee they shouldn't still be passing this onto you but it seems most will try to.

This IMO is a much more pertinent and effective way of fighting IR35 then arguing over employment rights.

But only if you are actually being forced into paying it.

The two cases are not the same and trying to equate them or say that one is "better" than the other doesn't make sense. They came about through different circumstances and were judged on different criteria, although both were ultimately resolved by reference to employment law.

They are both worth fighting but on their own terms. From what we know of the Westminster case empoloyers NI was not an issue, so going down the route of other employment rights was the only option.

In Elmour the IR35 issue was coincidental to a claim of Employee rather than Self Employed status, and recovering unfairly deducted tax. Elmour was in a Win-Win situation. If the Judge found he was an employee then the agency had to refund the Employers NI as employees are not liable for it. If he was self-empoloyed then they would have to refund it as it is supposed to be paid by the employer, his Ltd. Co. based on salary paid, which would have been much lower assuming the salary+dividend model.

[WordIsBond]

I just don't think contractors suing for employment rights is the right way to fight IR35 in the long term.

You're right. But this case wasn't about fighting IR35. It was about fighting clients who unfairly throw someone into IR35 at no cost to themselves and at significant cost to the contractor. It was about educating them that such carelessness is going to cost them something, too.

It doesn't make up for the cost to the contractor of being put inside IR35 when she shouldn't have been. It simply transfers some of that cost back to the client, and helps to send the message that maybe you should be helping us maintain outside status, rather than just sticking us with a hefty tax bill.

It potentially lays the basis for another case which could set some really interesting legal precedents -- such as, maybe, one that would rule that if you are going to declare a worker to be employed for tax purposes, you have to give them full employment rights.

These kinds of cases don't do anything to fight IR35, but they can do something perhaps vitally important -- they can make clients allies in fighting it. Right now, IR35 is solely the problem of contractors. If UK plc can be made to learn that IR35 is going to cost THEM heavily, then HMG is likely to suddenly be faced with some heavy hitters telling them a better solution is needed. Right now, there's no one complaining about it that has any clout.