ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

IR35: 2017 to 2019 - a case summary

  • LinkedIn (opens new window)
  • Twitter (opens new window)
Justine Ricommini By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)

4 February 2020

Key points:

  • IR35 rules are changing again from April 2020, in the private sector
  • Several cases have been heard since the public sector rules changed in 2017
  • The decisions in the cases do not offer much reassurance to tax advisers and engagers

Justine Riccomini takes us through the key IR35 tax cases since the introduction of the new rules in the public sector were introduced in April 2017.

Introduction:

Using April 2017 as a starting point, since the public sector rules for IR35 were brought in, there have been a number of cases heard in the Tribunals. The decisions do not give tax advisers much reassurance, raising more questions about HMRC’s approach to employment status than offering reassuring answers, and there are few precedents to rely upon.

Background

A relatively long list of cases has been through the Tribunals since April 2017 as a consequence of HMRC’s increased compliance activity. However, many of the cases are fact based and it is not easy to predict what will happen, although HMRC is not having an easy time of it, which suggests that the underlying guidance and CEST Tool are not particularly stable.

IR35 Case decisions since 2017

Case reference

Name

Date of Decision

Found in favour of:

STC 978 [2019] UKUT 121

Big Bad Wolff Ltd v HMRC

03/10/17 (FTT) & 9/4/19 (UT)

HMRC

TC 06501 [208]

Jensal Software Ltd v HMRC

16/5/18 (FTT)

The taxpayer

STC 2222 [2019] UKUT 326

Christa Ackroyd Media Ltd v HMRC

10/2/18 (FTT) & 25/10/19 (UT)

HMRC

[2018] UKFTT 201 (TC) 

MDCM Ltd v HMRC

12/4/18 (FTT)

The taxpayer

[2019] UKFTT 195 (TC)

Albatel Ltd v HMRC

16/3/19 (FTT)

The taxpayer

[2019] UKFTT 0242 (TC)

Atholl House Productions Ltd v HMRC

11/4/19 (FTT)

The taxpayer

[2019] UKFTT 387 (TC) 

George Mantides Ltd v HMRC

13/6/19 (FTT)

Decisions partly in favour of each party

[2019] UKFTT 415 (TC)

Kickabout Productions Ltd v HMRC

25/6/19 (FTT)

The taxpayer

TC 07377 [2019] UKFTT 583 (TC)

Paya Ltd & Ors v HMRC

17/9/19 (FTT)

HMRC

[2019] UKFTT 647

Canal St Productions Ltd v HMRC

25/10/19 (FTT)

The taxpayer

[2019] UKFTT 703 (TC) 

RALC Consulting Ltd v HMRC

29/10/19 (FTT)

The taxpayer

Please note that a more detailed analysis of the key points in the above cases will be available in the extended article which is available to subscribers of the ICAS Technical Bulletin.

Tax case law is how employment status for tax purposes is ultimately determined. Therefore, anyone deciding or advising on employment status, and from April 2020, producing Status Determination Statements (SDS), should familiarise themselves with applicable case law and the key issues which the judges used in each case to determine their decisions.

Mutuality of Obligation (MoO)

One of the key issues arising from the case law is that upon reading the case transcripts, MoO is still providing a problem insofar as HMRC’s interpretation of how it should be applied (for example, it is not included in the HMRC CEST Tool). In Mantides the principles around MoO were closely examined and were vital to the conclusions reached; in this case, of the two contracts, one amounted to an employment and the other to a self-employment. MoO certainly appears to have made a comeback in the courts over recent years. This contrasts with HMRC’s position - it appears to have relegated MoO to the back benches as a minor consideration. Engagers preparing SDSs should ensure that all the main decision criteria are included in the SDS process – including MoO.

A purposive view

Recent case law has shown that the judges are increasingly favouring adopting a purposive and holistic view of the arrangements rather than concentrating on one or two aspects of the key principles of employment status and using these as deciding factors. For example, in Ackroyd, which has been heard by both the FTT and the UT and in Paya which was heard at the FTT, the judges chose this method. In another employment status case (which was not related to IR35) from 2018, Pimlico Plumbers Ltd and another v Smith [2018] UKSC 29 a purposive approach was taken to the analysis of the contractual arrangements. Notwithstanding this, a main consideration in recent IR35 related tax cases still appears to be the level of control exercised by the engager over the worker – which, perhaps correctly, has been shown to be more weighty than other factors such as substitution and personal service.

It is important to note when considering tribunal applications that HMRC’s own litigation and settlement strategy requires HMRC to consider whether it has a decent chance of winning a case before proceeding. This is something which can legitimately be pointed out to HMRC during any dispute resolution process.

A note on precedents

It is clear from the above, which comprise mostly of First Tier Tax Tribunal decisions, that very few precedents have been set – FTT decisions are not binding. Further hearings are currently expected on Kickabout in mid-June 2020 under reference UT/2019/0112 and in Atholl House in early November 2020 under reference UT/ 2019 /0086.

Conclusion

Care needs to be taken when making employment status decisions and especially so from April 2020 when all public sector as well as large and medium-sized private sector and non-profit-making businesses will be responsible for issuing Status Determination Statements (SDS). Employment status is notoriously complicated and the new IR35 rules do not make things any less so.

HMRC scores IR35 hat-trick

By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)

4 November 2019

IR35 - Finance Bill 2019 draft provisions for private sector from April 2020

By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment & ICAS Tax Community)

15 August 2019

2-23-marsh 2-23-marsh
ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: