IR35 case outcomes 'could impact on freelancers'

Posted on 14 February 2008

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Her Majesty's Revenue and Customs (HMRC) may find it more difficult to impose IR35 after two tax tribunal cases were won by freelancers, one expert has said.

Writing for Shout99, David Greene of accountant Nasa Consulting, said that the cases – along with two others which were won by the taxman – can serve as an aide to freelancers who want a better idea of their IR35 tax status within the law.

One area where the ins and outs of the law were revealed was the right of substitution, Mr Greene said, adding that this factor was "instrumental" to the outcomes of the cases.

According to Mr Greene, the cases showed that the agreement between agents and clients must include a right of substitution.

"This appears to be more important than in the agent and contractor agreement as, if the client does not allow it at the top end of the contract chain then that is the end of the story," he wrote.

Also highlighted through the cases were issues relating to guaranteed work – with Mr Greene concluding that if this does not exist within the contract, and there is a right of substitution between client and agent, the freelancer is showing that they are not within the IR35 tax rules.

Category: IR35

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