Tax cases

IR35 applies

A freelance information technology consultant set up the appellant company. The company entered into continuous six-month contracts with a recruitment agency to undertake work for an insurance company (the lower level contracts). The consultant had led a team supporting and maintaining the insurance company's mainframe computer. Over the same period the recruitment company entered into six-month contracts with the same insurance company (the upper level contracts). The lower level contracts expressly incorporated the terms of the upper level contracts.
The Revenue ruled that the IR35 legislation applied. The appellant company appealed.
The Special Commissioner said that in establishing the terms of a hypothetical contract between the consultant and the insurance company for the purposes of IR35 the following factors indicated an employment relationship:

• the consultant was in charge of a team in that he had management responsibility for the team and was...