There were a number of lessons for all contractors if they want to stay outside of IR35, which have come out of the recent win by Roger Tilbury over the Inland Revenue at the Special Commissioners
1. The substitution clause is valid even if it is never used. The Inland Revenue claimed that none of the contractors at Ford had ever invoked their substitution clause, but this did not matter, as the Inland Revenue had the burden of proof that it wouldn‘t be used
2. Roger Tilbury was not part of Ford‘s business or undertaking, so he wasn‘t an employee, disguised or not. This was a quite important differentiating factor and may be an important fact in future cases. It was basically saying that as he was outside the normal structure of the company that he obviously didn‘t work for them. IR35 is looking more ridiculous and untenable by the day. It‘s obvious to anybody (including the Special Commissioners) that IT contractors aren‘t any sort of employees of their clients
3. The simple fact that he had a different colour of badge to the permies was considered an important differentiating factor
4. It was of no great significance that Roger had been contracting to Ford for 9 years
5. Roger was not under the control of the Ford management
6. Roger didn‘t have access to the sports facilities which all Ford employees did
7. He didn‘t have an annual salary but was paid hourly
Vive La Difference
The most important part of the case is that the Special Commissioner concentrated on the differences between Roger and an employee, and not the similarities.
The Inland Revenue‘s argument that many contractors are disguised employees is becoming more untenable by the minute. If we have a guy who has worked for the same company for 9 years and he isn‘t caught by IR35, then who is?
It looks as if the Special Commissioners can see the wood from the trees. They can recognise who is an employee and who is a contractor. They are not the same thing, and the Commissioners can see that.
The Professional Contractors Group has been set up principally to fight IR35.
It looks as of the end game has begun. It looks like, after the initial fiasco of the two lost court cases that the PCG tactics are coming good. It looks as if this stupid law is on its way out.
Whether by going through an umbrella company or simply by facing down the Inland Revenue, it looks as if most contractors are now slipping through the IR net.
After this judgment, and the Lime-IT one, it looks like anyone who pays IR35 now is a bit of a mug! Anyone who asks the Inland Revenue for their opinion is an even bigger mug, as Roger did originally.
Congratulations to Roger, and congratulations to the Professional Contractors Group. They set out to get all contractors outside of IR35, one way or the other, and it looks as if they are most of the way there now.
There will be dancing in the streets of PCGLand tonight!