In a recent IR35 appeal, an IT contractor providing services to a building society was ordered to stump up £74,523 in Income Tax and National Insurance ...
Mr Lee was a project manager for the building society on and off since 2007. The tax year that HMRC disputed was for 2012 and 2014, and the First-Tier Tribunal denied his appeal under section 49 of the Income Tax (Earnings and Pensions) Act 2003.
The tribunal found that the employment relationship would have been the same whether Mr Lee provided his IT skills directly or via the company he was using. It also found that because of his skills and knowledge of the building society's systems and procedures, no other contractor could be provided. It was also deemed unlikely the building society would have permitted a replacement, temporarily or otherwise.
The judges concluded that, "Looking at the nature of the relationship with the building society, it was one of employment. There was a mutuality of obligation present, but only within each contract. Mr Lee worked full-time for a number of years in the same role. He had no financial risk beyond that of an employee".
If you are contracting full-time for one client, I highly recommend you seek specialist tax and legal advice based on your own particular circumstances.
This applies to businesses offering contracts as well.
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