What is IR35?IR35 was first introduced in 2000 as a way to combat tax avoidance through ?disguised employment?. It dictates how freelancers and contractors are taxed when working for a client. The rules allow HMRC to ?look through? an intermediary, such as a Personal Service Company (PSC), and consider whether it is appropriate for the individual to operate in PAYE and pay National Insurance contributions (NICs).
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Following the PGMOL tribunal, Dave Chaplin, CEO of ContractorCalculator put the ruling through HMRC?s Check Employment Status for Tax (CEST) tool, which gave the answer ?We are unable to determine the tax status of this engagement?.
Commenting on the case and the CEST result Chaplin says: ?Had the referees or PGMOL used CEST to assess their status, the tool would have told them that it did not know the answer, and to call HMRC. HMRC would have then told them they were employees, which would have been incorrect, as a judge has now ruled that the referees are self-employed.
“This is yet another example of the CEST tool and HMRC giving misleading information when it comes to employment status.”
Andy Chamberlain, deputy director of policy at the?Association of Independent Professionals and the Self-Employed (IPSE), said HMRC had lost the case after assuming MOO was present in every engagement.“The tribunal disagreed,” he said.
?That, combined with a lack of control by PGMOL over the referees, clearly indicated?that this was not an employee-employer engagement. Unfortunately, we have again had to rely on the courts to make this determination.”
“If HMRC is struggling to determine who is employed and who is self-employed, then so too is everyone else.”
Chamberlain added: ?The best way to address this legal uncertainty is to write into a law a positive definition of self-employment.
?This would send a clear signal about who is and who isn?t self-employed, and would mean that individuals wouldn?t have to rely on the courts to get a resolution.?
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