Interested in the IR35 court cases? We list every single one here.
The Intermediaries Legislation is Chapter 8 of ITEPA, enacted in April 2000. This is commonly referred to as “IR35”, but confusingly “IR35 status” is also used to refer to whether someone is considered a “deemed employee” based on applying employment status case law.
Under Chapter 8, the contractor must assess their IR35 status. If they consider the IR35 rules apply to them (inside IR35) then they have to treat their income as if it was the entire cost (including employers NI) of them being hired. This is different to the new off-payroll tax – see later.
The dividend tax changes in April 2016 now mean that a contractor pays roughly the same amount of tax on their income as an employee does on their salary. The vast bulk of perceived avoided tax is avoided by the hirer. About 84% of it. This is why the Off-payroll tax (Chapter 10 of ITEPA, live from April 2017 in the public sector and live from April 2021 in the private sector) is different.
With the Off-payroll tax, there is the concept of a “Fee Payer”: This is the agency if there is one. Otherwise it is the client. The client must assess the IR35 status of the contractor. The Fee Payer must then pay over all the taxes if they are inside IR35 by treating the contractors earnings as salary. So employers NI must be paid on top of the contractors earnings (which is called the “Deemed Direct Payment”). Then, just like salary, PAYE and employees NI is deducted from the contractors earnings. If the contractor is wrongly processed as outside IR35, then the fee payer is liable for the tax, not the contractor.
The IR35 court case history
In the early days of IR35 HMRC attempted to classify many contractors, particularly in IT, as “deemed employees”, but they had very little success. In over a thousand cases HMRC gave up the fight before reaching court.
In the last twenty-seven case decisions, since April 2010 they have only fully won 9 cases out of 27 – just a 33% win rate. Two cases have been split decisions, and contractors have won the other 15. This is against the backdrop of HMRC claiming that there is widespread non-compliance with the rules. If that’s the case, then why aren’t HMRC winning more cases?
HMRC’s win in Feb 2018 against Christa Ackroyd was the first case they had won in 9 years, since the Larkstar Data case. Since then they lost the case against Lorraine Kelly, where the judge said it was not a borderline case, and they lost against another presenter, Kaye Adams, because she was in business on her own account (confirmed at UTT in Feb 2021). Then came a split case with a urologist, followed by another loss against a presenter. They finally won against three BBC presenters in September 2019, This was short lived, becase they then lost to an IT contractor again, with a similar case to Jensel, and then another presenter in Oct 2019. Then they won again against an IT contractor in 2019 and two more presenters in Feb 2020 in Oct 2021. In Feb 2022 HMRC lost the case for Basic Broadcasting Limited, because Adrian Chiles was considered in business on his own account. Following that, at the Court of Appeal, HMRC overturned the decision of the UTT in Kickabout Productions Limited, but failed to do so for the Atholl House case. A series of cases related to taxpayers working at Sky TV have had mixed outcomes, with HMRC winning McCann Media Limited, and Alan Parry Productions Limited, but failing with S & L Barnes Limited. In March 2023 HMRC also lost the case against Gary Lineker Limited.
HMRC’s Litigation and Settlement Strategy (LSS) states (Page 7) “where HMRC believes that it is unlikely to succeed in litigation it will, in the majority of cases, concede the issue”. If HMRC are not litigating in a reasonable manner they should be winning at least half of cases. In more recent times this does not appear to be the case. They are only fully winning 33% of them.
List of IR35 court case decisions
|Date of case||Date of decision||Name of case||Who won?|
|03 Aug 2001||12 Sep 2001||Battersby v Campbell||HMRC|
|01 Dec 2001||22 Jan 2002||F S Consulting Limited vs McCaul||HMRC|
|01 Oct 2002||01 Oct 2002||Lime IT vs Justin||Contractor|
|27 Feb 2003||28 Mar 2003||Synaptek vs Young||HMRC|
|15 Aug 2003||03 Nov 2003||Tilbury v HMIT||Contractor|
|01 Jan 2004||08 Oct 2004||Usetech vs Young (inc High Court)||HMRC|
|01 Mar 2004||29 Jul 2004||Ansell Computer Services||Contractor|
|23 Mar 2004||22 Oct 2004||Future Online (inc High Court)||HMRC|
|15 Dec 2004||17 Jan 2005||Netherlane Limited||HMRC|
|28 Jun 2007||05 Jul 2007||Island Consultants Ltd V Revenue & Customs||HMRC|
|23 Jul 2007||20 Dec 2007||Datagate Services Ltd||Contractor|
|20 Sep 2007||11 Dec 2007||Dragonfly Consulting Ltd||HMRC|
|26 Sep 2007||11 Dec 2007||MKM Computing Ltd||HMRC|
|01 Nov 2007||11 Dec 2007||First Word Software Ltd||Contractor|
|22 Jan 2008||19 May 2008||Alternative Book Company Ltd||HMRC|
|24 Nov 2008||15 Jan 2009||Larkstar Data||HMRC|
|08 Dec 2009||06 Apr 2010||Novasoft||Contractor|
|15 Nov 2010||05 Jan 2011||MBF Design Services v HMRC||Contractor|
|10 Jan 2011||24 Jun 2011||Marlen Ltd||Contractor|
|17 Feb 2011||11 May 2011||ECR Consulting||Contractor|
|12 Apr 2011||06 Jul 2011||Primary Path Ltd||Contractor|
|24 Oct 2011||28 Nov 2011||JLJ Services v HMRC||Split case|
|15 Nov 2016||27 Jan 2017||Armitage Technical Design Services Limited||Contractor|
|26 Sep 2017||14 Feb 2018||Christa Ackroyd||HMRC|
|04 Oct 2017||16 May 2018||Jensal Software Limited||Contractor|
|08 Nov 2017||19 Mar 2018||MDCM Ltd||Contractor|
|12 Nov 2018||20 Mar 2019||Albatel Limited (Lorraine Kelly)||Contractor|
|11 Mar 2019||16 Apr 2019||Atholl Limited||Contractor|
|10 May 2019||13 Jun 2019||George Mantides v HMRC||Split case|
|18 Sep 2018||09 Jul 2019||Kickabout Productions||HMRC|
|07 May 2018||18 Sep 2019||PAYA / Willcox / Allday Media [3 x cases]||HMRC|
|08 Oct 2018||25 Oct 2019||Canal Street Productions||Contractor|
|23 Sep 2019||29 Oct 2019||RALC Consulting||Contractor|
|11 Jun 2019||18 Feb 2020||Northern Lights Solutions Limited||HMRC|
|05 Jun 2018||21 Feb 2020||Red, White and Green Limited||HMRC|
|22 Oct 2020||18 Oct 2021||Little Piece of Paradise Limited||HMRC|
|11 Nov 2019||09 Feb 2022||Basic Broadcasting Limited||Contractor|
|05 Oct 2021||10 Mar 2022||McCann Media Limited||HMRC|
|27 May 2022||16 Jun 2022||Alan Parry Productions Limited||HMRC|
|29 Jul 2022||12 Jan 2023||S & L Barnes Limited||HMRC|
|27 Feb 2023||27 Mar 2023||Gary Lineker Media||Contractor|
|18 Jan 2023||29 Mar 2023||Red, White and Green Limited||Contractor|