IR35 case settled with Revenue
After a lengthy and hard fought four-year battle, one of the first ever IR35 cases has been settled two days before it was due to go to court.
Link: IR35 special area
The IR35 enquiry between Professional Contractors Group (PCG) member and former freelancer Mark Sheerin and the Inland Revenue was settled for a mere £400. PCG chairman Simon Juden hailed Sheerin’s ‘victory’ as ‘common sense’ and that it ‘spoke volumes’ for the strength of Sheerin’s case.
Sheerin, an IT consultant who lives in Edinburgh, was one of the first freelancers to face a challenge from the Revenue when IR35 was introduced.
Juden told Accountancy Age: ‘Mark is delighted with the outcome and is very relieved, after four years of struggle, to have come out with a positive result. He has paid the Revenue £400 to settle the case. This covers the initial assessment and means that the Revenue have put aside all IR35 releted matters between themselves and Mark. It is very much a “hands off each other” kind of agreement.’
A three-month assignment in 2000 was under investigation. Sheerin had submitted the contract paperwork to the Revenue for review, however, the contract failed, and Sheerin began a long struggle to show the Revenue that his company was genuinely in business on its own account, as demonstrated by contractual terms and the reality of how the company operated.
Sheerin represented himself initially, before seeking professional help for which he paid until the PCG agreed to fund his case. Three years later, despite PCG backing and help from a firm of tax experts, Sheerin became frustrated and disillusioned about the lack of progress. In late 2003, his case was reassigned to Accountax Consulting, who adopted a more proactive approach.
‘We decided to apply for a transfer of jurisdiction from the General to the Special Commissioners,’ said Accountax specialist Dave Smith, ‘and in the end, a few days before the scheduled two-day court hearing, the Revenue wanted to settle. We were able to negotiate a settlement of just £400 to cover four years’ alleged liability, without the need for a hearing.’
Hearing the outcome, Mark Sheerin said, ‘I am just so relieved that it’s over; the stress has taken its toll and had a significant effect on my personal life. I’m very grateful to PCG, whose directors have been very supportive of me, and to Dave Smith and Accountax for being extremely constructive, helpful and focused.’