Troubling termination

23 March 2006

Issue: 4050 / Categories: Forum & Feedback , IR35

Mr C was employed by B Ltd until the late 1990s when he took a career break. On returning to work with B Ltd he was told that he must provide his services through a company, A Ltd, of which he is the sole director/ shareholder. This arrangement subsequently came within IR35.

Mr C fell ill in April 2004 and B Ltd entered a new contract with A Ltd up to September 2004 subject to
Mr C being able to provide his services. Further work may have been offered thereafter on an ad hoc basis. The contract between A Ltd and B Ltd was subsequently terminated by B Ltd at the end of May 2004.
Following legal advice in August 2004 a compromise agreement was entered into between A Ltd B Ltd and
Mr C whereby A Ltd was offered a further contract until March 2005 conditional upon Mr C being available to work. This contract was not renewed and the last payment received by A Ltd from B Ltd was in March 2005.
Under the terms of the agreement in August 2004 B Ltd paid Mr C the sum of £25 000...

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