IR35 does not apply

Hypothetical contract under the intermediaries legislation

D and his wife were the directors and employees of MDCM Ltd which provided management services to construction companies. If a company needed someone with D’s expertise it contacted an introductory company S which contacted D – as director of MDCM. If the instruction was acceptable MDCM and S entered into a contract in standard form while S and the construction company in this case STL entered a separate contract at a higher day rate.

HMRC said that D as the worker personally performed services for a client under a contract through an intermediary MDCM. But if he had carried out the services directly with the client the hypothetical contract would regard D as an employee of S.

The taxpayer appealed.

On HMRC’s assertion that STL controlled D’s work the First-tier Tribunal said...