IT contractors
IR35 can become a particular issue for IT contractors, especially when contracts are extended. One of our clients worked for an international bank as project manager for the installation and implementation of specialist software. His initial contract of six months was extended five times, and he remained with the bank for three years.
HMRC decided that he was inside IR35 and assessed a taxation shortfall of £84,000, excluding penalties. HMRC had questioned the bank about his role and based their judgement on the answers given. However, when we conducted a full status assessment, we were able to reveal that the bank had mislaid all relevant records of the project, its progress and final outcome, and none of the staff concerned with the project were still employed at the bank. Our assessment also included detailed reviews of the diary entries we had recommended that our client keep, minutes of meetings held with bank management during the project, an extensive internal questionnaire and a review of the agency contract.
Despite our conclusive supporting evidence, HMRC refused to back down. The case was considered by the General Commissioners who ruled in favour of our client.
Our involvement was all part and parcel of our service package, so there were no additional costs for our client to pay. Knowing that we helped him out of a tight spot was reward enough!
