The recent Tilson v Alstom verdict has given ammunition to those who say that IR35 is inequitable and should be abolished.
It has to be stressed that the verdict is related to employment law but it leaves IR35 a bit naked as it now shows that this ‘˜implied‘ relationship between contractor and client is for tax purposes only as this verdict shows that there is no employment relationship between contractor and client.
IR35 was brought in to bash contractors that they saw as really ‘˜disguised employee‘s‘ and to take the full whack of tax from these imposters.
Too Many Caught
It was supposed to counteract those people who were employees on a Friday and contractors for the same firm on a Monday.
The problem was that the legislation hit a lot more contractors than that.
However, this verdict effectively says that contractors are not disguised employees and that the contract with the agency is valid and overrides any kind of implicit contract between contractor and client.
This doesn‘t override IR35 as that is tax law and this is employment law but it leaves IR35 ‘˜isolated‘ and looking out of kilter with the courts.
The courts are saying that contractors are not disguised employees according to employment law but the Government are saying they are disguised employees for tax purposes.
That doesn‘t strike one as fair.