Court ruling ends IR35 uncertainty

Court ruling ends IR35 uncertainty

The Court of Appeal's decision to reject the Professional Contractor Group's case against the hated IR35 rule will lead to a glut of cases involving IT staff, according to legal experts.

Having had its appeal rejected, the PCG has vowed to continue fighting against the tax. It had argued that its members, who are primarily small independent contractors, should be treated as such and not as employees for taxation purposes.

IT managers are likely to face significant challenges in attempting to clarify whether their staff would be regarded as employees or contractors, explained John Salmon, partner at law firm Masons.

‘The situation is unclear at present,’ he said. ‘No one knows for certain how the rules will be applied.’

However, the Inland Revenue has expressed its delight at the verdict, claiming the ‘uncertainty’ caused by the case was now over.

An official Revenue statement read: ‘The government is pleased that the Court of Appeal has confirmed the judgement given in the High Court in April that the service company legislation is not contrary to European Community law. ‘The uncertainty caused by this case can now come to an end. The service company legislation was necessary to ensure fair taxation of all workers, whether or not they use a limited company to arrange their contracts.’

More details of test cases against IR35 are now expected to emerge at the end of this month.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource