TaxPersonal TaxCourt ruling disappoints contractors

Court ruling disappoints contractors

Experts have urged contractors and sole traders not to give up hope following last Friday's controversial High Court IR35 ruling in favour of the Inland Revenue.

Link: Follow the long-running saga

The decision was described as a ‘bitter blow’ by the Professional Contractors Group, the trade body that supported ex-police officer Gordon Stutchbury against the Revenue.

The Revenue claimed that Stutchbury was a ‘disguised employee’ of EDS since he had entered into a six-month contract with the IT services giant. Stutchbury contested this.

But Stephen Lister of Bond Pearce solicitors said there were a number of positives that came out of the ruling. The Revenue hung much of its case on the significance of ‘mutuality of obligation’, which obliges the employer to provide work for a client, and pay for them over the terms of a contract.

In doing so, the Revenue admitted that if no mutuality of obligation exists in a contract, then IR35 does not apply.

‘The Revenue will be confronted with difficulties in the future if they attempt to argue that mutuality of obligation is not a necessary element of a contract of service,’ said Lister.

Freelancers must decide by 19 April whether or not to pay IR35.

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