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 ...
If you're worried about your IR35 status, seek professional tax and legal advice!
The contractor, Robert Lee, worked under a company called Northern Light Solutions. He challenged an earlier ruling where he was found to be an employee of the building society.
"HMRC included him under IR35 and sent him a demand for Income Tax and National Insurance!"
Mr Lee was a project manager for the building society on and off since 2007. The tax years that HMRC disputed were 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.
"IR35 says that if a contractor can be substituted, then they are, in fact, self-employed!"
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.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
No unauthorised use, duplication, distribution or modification to any original content contained within this blog is permitted without prior written permission of the author. All other trademarks and registered names are acknowledged.
