Article - Inland Revenue win second case at the Special Commissioners (FS Consulting v McCaul).
The second IR35 case has been heard before the Special Commissioners and the Inland Revenue has again been successful in establishing that IR35 applied to the contractor. The case of FS Consulting Limited v McCaul (HM Inspector of Taxes) was heard in December and the detailed judgment was released recently.
The arguments put forward by the contractor’s counsel focussed on interpretation of the Social Security Regulations and the issue of mutuality of obligation while the Revenue concentrated on the usual issues of working solely for one client, on the client’s site, for a set number of hours using the client’s equipment. The Commissioner found that the contractor was not controlled by the client but was integrated to a degree into the workforce.
The Special Commissioner considered first the factors found which pointed to the conclusion that there was a contract of service.
Those factors were:
Obligation
Control of a Skilled Man
Control through Termination of Contract
Lack of Hiring Employees
Lack of Equipment
Hourly Wage
Lack of Risk and Profit
Mutuality of Obligation
Exclusivity
Part & Parcel
The Special Commissioner then considered the factors that pointed to the conclusion that Mr Simpson was working under a contract for services.
Those factors were:
Lack of Holiday/Sick Pay
Lack of Permanence
Limited Integration
Substitution
Control of a Skilled Man
The Special Commissioner concluded that on balance the factors weighing against there being a contract for services was outweighed by the factors for there being a contract of service. The Commissioner made particular reference to the fact that because the contracts were not professionally drafted it was necessary to look at the substance of the relationship rather than the wording of the contract. The message is clear that for a contractor to legitimately operate outside IR35 there must be a comprehensive commercial contract. |