During the election campaign each of the major parties turned their attention to the self-employed vote, and each promised to review the planned changes to IR35 following the election. Now it has been confirmed that the Conservative Party will remain in power, we will see whether the Conservative Party's review does lead to substantive changes, or if it was merely a marketing ploy to catch headlines and votes. As the draft legislation is aimed at reducing perceived tax avoidance, it is difficult to believe that the changes will be dropped completely. However, there is a chance that the implementation will happen later than planned. Our advice continues to be that prudent businesses should address the changes sooner rather than later, not least to ensure that clear messaging can be made along the contractual chain and good relationships maintained with both end-user clients and contractors.
Case law – a binding decision
The judgment in the Christa Ackroyd tax appeal to the Upper Tribunal has recently been published, which is the first example of binding case law. For a long time, the court decisions have been at First Tier Tribunal, and these decisions are not binding on other courts, so there has been no binding precedent to follow. The Upper Tribunal decision emphasises the importance of considering all the facts relating to the particular circumstances under inspection, rather than giving clear guidelines as to which factors should have greater weight than others. The decision focuses on the extent to which the BBC could control Christa Ackroyd and, in particular, the importance of the broadcasting guidelines. There are not many examples of rules akin to the broadcasting guidelines in other industries, so although it is helpful to have the appeal decision, it will not serve to make the job of making status determination decisions significantly easier.
Case law – is MOO finally being seriously considered?
The recent case of RALC Consulting Limited contains a longer-than usual consideration of the concept of mutuality of obligation, which is a key requirement to be within IR35. This is helpful because the tribunal found that the taxpayer was not within IR35, even thought he was working for a former employer, which would usually be a significant red flag. The tribunal based their decision on the fact that the client was not obliged to offer the taxpayer work on each and every day of the contractual term – merely those days where work was available. This case may be appealed by HMRC, but for the time being provides some helpful guidance on how to avoid creating mutuality of obligation in a way that is likely to be acceptable to both consultants and clients.