IR35: Intention of the parties

It is often stated that the intentions of the parties is important and there are a couple of questions on the Inland Revenue questionnaire relating to this point. The questions are "Did the employer intend the worker to be self-employed from the outset?" and "Do both parties to the contract agree on this?"

As stated earlier a common tactic of Revenue auditors is to discredit the Contract especially if they believe it is not a live contract. It seems rather unusual to include questions to the Intention of the Parties, if the answers may be ignored. In addition, if both parties agree to the Contractor being treated as self-employed, would the Revenue accept it? Probably not.

It is even more surprising when we consider the Ready Mixed Concrete (South East) Ltd. V. Minister of Pensions and National Insurance case from 1968. There were 3 conditions for a Contract of Services (Employment) as shown at 6/ Substitution and Exclusivity. The contract of Mr. Latimer (owner/driver) working for Ready Mixed Concrete (RMC) stated Latimer would be an independent contractor. However, the Judge stated that the question was whether there was a master/servant relationship. This would be decided by law based on the rights of the Contract and not based on what Latimer or RMC wanted the Contract to show.

Article kindly supplied by Ray McMahon


Editor's note: You may be interested in our IR35 calculator

Useful links: IR35 substitution  IR35 control  IR35 mutuality of obligation

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