IR35: Proper checks
There are many checks to be made to arrive at the correct status of an individual. It is not sufficient to "pick one topic" like substitution or control and base all your arguments on this one point. In the Express and Echo Publications v. Tanton case, the Industrial Tribunal Chairman stated it is necessary to look at the overall position, and whilst it is useful to consider a number of different factors which may be pointers, it is not necessarily the case that any one factor can tip the balance either way. You would certainly challenge the Revenue if they only looked at the weekly pay or the timesheets submitted. You would challenge the Revenue arguing they were "cherry picking" the few points that pointed towards employment.
The well known Tax case of Hall v Lorimer (Court of Appeal November 1993) gives us an insight into how the checks are made. It also makes clear that clauses in one contract may have more weight than the same clauses in another case. Lorimer was originally an employed vision mixer who became a freelance vision mixer working at different companies. It was agreed that the work was very skilled and involved editing television programmes, which would later be seen by the public. There were many other people involved in the process before the work was completed. Generally, the work would be undertaken at the Client's premises (or premises hired by the Client), using the Client's expensive editing equipment. (The case is discussed in more detail later). In arriving at the decision it was stated:
'In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of thi IR35 exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The process involves painting a picture in each individual case.'
Clearly if you do not consider all the facts, then your arguments could be flawed.
Article kindly supplied by Ray McMahon
Editor's note: You may be interested in our IR35 calculator