Tax Tribunal Rules against HMRC in Contractor Case

IR35 legislation is once again in the spotlight after another tribunal hearing has ruled against HMRC in favour of the independent contractor, finding him to be “legitimate”.Engineering contractor Gary Hughes won his IR35 case after a Birmingham tax tribunal found that a) no mutuality of obligation existed and b) that the degree of control needed to establish a Contract of Employment did not exist.

Hughes had contracts with two divisions of JCB through his Limited Company Marlen Ltd. HMRC accused him of not being a legitimate contractor and of being in breach of IR35 legislation; they argued that he was in effect a senior employee at JCB.

Legal firm Accountax Consulting represented Hughes and they in turn argued that IR35 legislation did not apply. They cited a few particular instances to prove their case – one example was when Hughes and other IT contractors were sent home without pay when the company’s IT systems weren’t working.

Judge Lady Mitting agreed with their findings, saying that the irreducible minimum required to demonstrate a contract of employment was not met – “It is our conclusion that there is no mutuality of obligation and the degree of control which would have been needed to establish a contract of employment just did not exist.”

“Working through a reputable Umbrella Company or having a professional, in-the-know accountant in your corner is probably the only way to be truly safe from this kind of case, which should really not have gone to court in the first place,” said Pieter Carstens of 1st Contact Accounting.

To find out more about IR35, please visit