There has been yet another victory for contractors and opponents of IR35 this month as a tribunal ruled in favour of engineering contractor Gary Hughes. The case, brought against the contractor who was operating under his Limited Company Marlen, ended last week with Mr Hughes emerging victorious.
Marlen had been contracted by digger firm JCB when he attracted the attentions of HMRC, who launched an investigation into the relationship between the two companies. HMRC argued that the engineering contractor had carried out his services to JCB in a manner that appeared similar to a senior employee.
However, the Birmingham tax tribunal ruled that the degree of control exercised by JCB over Mr Hughes was insufficient to constitute an employment contract.
Accountax Consulting, who represented Hughes, said of the ruling:
“It was always our opinion that IR35 did not apply from the outset. The tribunal found that the irreducible minimum [required to demonstrate a contract of employment] was not present and it only takes one factor to be missing for the relationship not to be one of employment.”
Although the full facts of the case will not be revealed until the ruling is published, the Marlen decision already deals another blow to HMRC’s increasingly beleaguered enforcement of the legislation.
Reflecting on the outcome of the tribunal, the PCG commented –
“With such a string of defeats one asks whether HMRC will change their approach to IR35 cases, since it is becoming increasing apparent that the cases they are choosing to pursue are clearly not within the ambit of IR35.”