IR35 decision – Why It is bad for all contractors

IR35 Decision
IR35 Decision

IR35 Decision

Recently Bill Hood, backed by the PCG, lost an IR35 decision at the Special Commissioners. We look at why this affects all contractors.

Bill Hood was a contractor who specialised in oil drilling equipment and a piece of software related to the oil industry. He contracted through his limited company through an agency for ABB. His wife was also in the company.

So, there are a number of reasons why contractors thought Bill Hood would win his case, as a number of these factors had given other contractors wins.

Why contractors thought Bill Hood would win IR35 case

1. Mr Hood had no contract with ABB but had one with his agency NES, which in turn had one with ABB.

2. Mr Hood had already contracted at ABB in 1996, but through his agency he took a contract of no fixed duration in 2000. It was thought it would last a few weeks but it lasted a few months

3. Mr. Hood‘s contract with the agency didn‘t specify a set working week. However, the agency‘s contract with the client stipulated 37.5 hours. The Special Commissioner took that as more important.

4. He was able to, and did, decline overtime work at the weekend.

5. They didn’t pay Bill if he wasn‘t working. The company would send him home to his lodgings if the computer crashed. So, they paid Bill Hood only for the hours he worked

6. Mr Hood‘s evidence was that he determined himself the hours he would work, starting and finishing at times to suit himself and taking holidays when he wished, although as a matter of courtesy he told ABB in advance of his intentions.

Holiday Pay

7. He received no holiday or sick pay.

8. It was agreed by the prosecution that Mr. Hood could be laid off, if there was no work, with minimum notice, unlike a permanent employee.

9. Mr. Hood had to take out employers‘ liability, public liability and professional indemnity insurance because of the contract with his agency.

10. He had the right of substitution in the contract.

11. He had also done work for two other companies while engaged with ABB, using his own equipment and in his own time.