Revenue urged to test IR35.

The Inland Revenue is being pressured to stage a special test case to settle many of the unresolved issues around IR35 after campaigners lost their High Court battle to overturn the hated tax measure.

The Professional Contractors Group claimed IR35 contravened European law and the Human Rights Act. The judge dismissed its application on Monday, but did make criticisms of the Inland Revenue’s management of the issue.

Campaigners, including IR35 critic Anne Redston, a chartered tax adviser at Ernst & Young, now believe a test case is necessary to clarify how Inland Revenue tests of service companies will work. ‘If it doesn’t happen deliberately what we will see is perhaps a series of cases that might not be conclusive.’

She believes Revenue officials and the PCG should agree a case that could go before Revenue Commissioners to set a precedent that both bodies could abide by.

At the High Court on Monday there was disappointment among contractors who had high hopes the case would be successful.

There is now concern for many who have made no arrangements for testing whether their contracts come under IR35 before the 19 April deadline when the first payments under the rule are due.

The PCG remained upbeat after the ruling saying the judge had agreed with the contractors on many points of fact and had created guidelines for the Revenue.

Gareth Williams, chairman of the PCG, said: ‘I can’t overstate enough the significance of the ruling. It will be easier for our members to show they are genuine businesses.’

More on this issue and news stories as they break can be found at our IR35 resource centre at

Revenue restructures, news in brief, page 2.

Related reading