'Calamitous' HMRC blunders Mantides IR35 appeal, by failing to file on time

HMRC has embarrassingly missed the chance to appeal locum doctor George Mantides’s partial IR35 victory, because the tax authority simply failed to file on time.

In an update on Friday, an advisory confirmed that the Upper Tier Tribunal had “denied” the Revenue a hearing to contest an FTT ruling in 2019 that Dr Mantides was outside IR35 at Medway Maritime Hospital (MMH).

“HMRC missed the chance to appeal an IR35 verdict at the Upper Tier Tribunal hearing,” said Nicole Slowey of the advisory, Qdos. “The reason? They missed the deadline to submit an application!”

'HMRC submitted late'

A UTT judgment released on Thursday confirms, saying that although HMRC sought permission to appeal Dr Mantides’ MMH contract in 2013 as being outside IR35, the tax department’s application was “submitted late.”

“And the FTT declined to grant an extension of time in which to make the application,” UTT judge Jonathan Cannan continued.

“A further application by HMRC to this tribunal was refused both on the papers and subsequently following an oral hearing.”

'Taxman regularly struggles to tell inside IR35 from outside'

Given HMRC is the most high-profile baiter of people to submit on time, and file ahead of deadline, IR35 expert Seb Maley suggests the irony is matched only by the indicativeness.

“That HMRC missed the deadline to appeal the contract Mr Mantides held with Medway Maritime Hospital tells you everything you need to know about the efficiency of the tax office,” began Mr Maley, Qdos’s CEO.

“Not only does HMRC regularly struggle to identify if a contract belongs inside or outside IR35, but they aren’t organised enough to lodge an application to appeal despite it being something as significant as an Upper Tier Tribunal. It’s shambolic.”

'IR35 status morphed, almost overnight'

Away from the courts, a further irony is that contractors themselves are having to understand how jobs can morph in IR35 status, sometimes more rapidly than from a Friday to a Monday.

“I don’t know if the client has got a new Status Determination Statement as I declined the opportunity, but what surprised me was how it was ‘inside’ but turned into an ‘outside’ IR35 contract -- almost overnight,” one IT contractor posted, further explaining:

“Possibly [due to not many candidates going forward], they might have changed the working practices, and then reassessed the contract. But I wouldn’t hold my breath on the [change to working practices] actually.”

'Hard hurdle to overcome'

Graham Webber, a director at WTT Consulting which advises on HMRC disputes, warned the app specialist and other IT contractors seeing IR35 status change rapidly on advertised roles: “I'd be very cautious.

“If the [client] advertised as ‘inside’ [but] had no takers and could not increase the budget, then a simple re-label to ‘outside’ is going to be a hard hurdle to overcome should HMRC [subsequently] ask any questions,” he said.

Elsewhere online, there is a sign that the Revenue’s blunder in the Mantides case, seemingly caused by the tax office not being timely or organised, might not be a one-off.

'Making me look like a liar'

“Dearest HMRC, we’re really going to fall out soon,” mused a self-described “frustrated” accountant, in a mock letter of complaint to the taxman.

“You’re taking NINE months to respond to my letters. You’re sending out client authorisation codes that arrive after they’ve expired. You’re ignoring my emails.

“What have I done to deserve this?!” continued the accountant, Beth Jackson. “You’re making me look like a liar to my clients when I keep telling them ‘HMRC says 14 days’ and then you ghost me yet again.

“You can’t still be using ‘covid’ as an excuse, surely? You wouldn’t accept us using covid as an excuse for being late…so you can’t expect us to accept it from you.”


An HMRC spokesman has been invited by ContractorUK to comment on the Revenue missing the deadline to appeal the First Tier Tribunal’s May 2019 decision on Dr Mantides’ status.

For now though, if there is no appeal, then there can be no overturning of the FTT’s ruling that the NHS consultant was outside IR35 at MMH, so his bonafide contractor status stands.

“I believe [that is correct],” says IR35 expert Mr Maley.

He added in a statement last night to ContractorUK. “HMRC have missed their chance to appeal this IR35 case because they submitted their application for permission to appeal after the deadline. It goes without saying that HMRC’s latest calamity won’t have done their reputation any favours.”

'We will consider submissions post-PGMOL'

But in a further twist for urologist Dr Mantides, his appeal against the half of the 2019 decision which went against him -- that he was inside IR35 at the Royal Berkshire Hospital, will now not be determined until the decision in the PGMOL case is announced.

In the same judgment stating HMRC to have missed its appeal deadline, Mrs Justice Bacon said: “We will consider that…appeal [by Dr Mantides, only] in light of further submissions from the parties following the decision of the Court of Appeal in PGMOL.”

'Fundamentally flawed'

At Qdos, which runs IR35 contract reviews, this aspect of the UTT ruling is perhaps more important than the spectacle of HMRC missing its appeal deadline.

“Like Mr Mantides’ contract, the PGMOL case, involving professional football referees, hinges on whether the individuals in question were mutually obliged to work for their client, in the way that employees are,” Mr Maley says.

“If it’s found that Mutuality of Obligation doesn’t exist, then HMRC’s IR35 tool, CEST, [would be] fundamentally flawed and hundreds of thousands of IR35 decisions it has made will be questioned.” 

'CEST user error'

His comments come after CEST Explained author Rebecca Seeley Harris said undetermined decisions produced by the tool were often caused by “user error” or lack of knowledge as to the inputs.

“Interestingly, most of the time when it has been corrected, the outcome has been outside IR35”, she said of the ‘unable to determine’ outcomes, which as an issue is likely to crop up this morning in a HMRC-taxpayer webinar on using CEST.

She added: “CEST definitely has its drawbacks but, a lot of the time the problem is…[also] a lack of investment in properly understanding employment status assessments.”

'Exposing HMRC's interpretation on mutuality'

Founder of ReLegal Consulting, Seeley Harris has also spoken out about the Professional Game Match Officials Limited (PGMOL) case, which Dr Mantides is now waiting on, seemingly to determine his own IR35 fate.

“This is going to be an important judgment on mutuality of obligations, especially exposing HMRC’s interpretation of it,” Seeley Harris said, speaking before the case took on additional importance on Thursday.

“It is hard to see how HMRC are going to [win the] appeal on the basis of mutuality as the UT [in January 2020] was quite explicit in its understanding. But HMRC got permission to appeal to the Court of Appeal which means that the court have deemed that they do have an argument. Their argument might, however, not be based on mutuality”.

'PGMOL decision imminent'

Speaking on Friday, Qdos’s Mr Maley said the PGMOL verdict may potentially be very “important.”

“This decision is imminent [as it] could impact the outcome of several cases and prove that HMRC’s view of one crucial aspect of IR35 case law [- Mutuality --] doesn’t stack up.”

The HMRC spokesman has also been asked when the department expects the judgment in PGMOL, which even before its implications for Dr Mantides were apparent, was said to represent a ‘high stakes’ decision for the taxman.

Editor's Note: UPDATE: The HMRC spokesman said of the George Mantides case: "HMRC does not comment on ongoing legal proceedings. The final outcome of this case is yet to be determined, pending a Court of Appeal decision in a separate case.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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