IR35 Court Verdict – Contractor wins huge IR35 case

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Government IR35 Victory
Government IR35 Victory

Ansell IR35 Court Verdict

This article, about a huge IR35 court verdict win for a contractor is an old article. However, we are publishing it because the Government is going to change the IR35 rules in the private sector from April 2020.

So, it is a good time for contractors to look at old cases where contractors won over HMRC and why. To be forewarned is to be forearmed at a time when it is predicted that around 50% of contractors will fail HMRC’s IR35 Test.

Huge IR35 Court Victory for Contractors

A contractor has won a huge IR35 court verdict.

Mike Ansell was contracted to British Aerospace. HMRC decided that his contract was caught by IR35. He disagreed – so he fought the case with the backing of the Contractors Group IPSE and Dave Smith of Accountax.

He won his case.

The precedent is not legally binding as it was judgment by the Special Commissioners rather than by a court but in the past HMRC has taken notice of these verdicts and amended their behaviour accordingly.

Reasons for Contractors IR35 Court Victory

According to Dave Smith talking to ZDNet, there were five reasons for the Special Commissioner giving the verdict in favour of Mike Ansell:-

1. British Aerospace were under no obligation to give Mike work

2. There was no obligation on Mike‘s part to do a minimum of guaranteed hours, so there was no mutuality of obligation

3. Mike had flexibility to take time off when he wanted without permission. The Special Commissioner said that this was very important when judging between someone in full employment and a contract worker

4. He had the option to provide a substitute worker, even though in practice he never did

5. The Commissioner saw Mike as being in business on his own account with all the financial risks that that entails, and because he was acting like an entrepreneur

This is a major win for contractors in general. It is seen as a landmark ruling, and will help other contractors in their bids to stay outside IR35.

Contractors should take lessons from this IR35 court victory.

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