How to fight unfair IR35 decisions

6th April 2017

Article written by:


Andy Vessey, Senior Tax Advisor at Qdos Contractor writes…

Today, the long-awaited public sector IR35 changes come into force. The responsibility for setting the employment status of contractors working in the public sector will now fall on public sector engagers, rather than contractors themselves.

The contracting world waits with baited breath, nervous to see how these changes will play out. Uncertainty and sheer panic has been the recurring theme of these changes. Are public sector bodies really ready, let-alone experienced enough to make fast, accurate IR35 decisions on a large scale?

Early signs are worrying, with recent news confirming The NHS and TfL are making blanket IR35 decisions, or in other words, implementing a ‘one-size-fits-all’ approach.

It’s news like this that has led to 85% of contractors to reveal that they will leave the public sector and never return should they be found inside IR35.

Given that being placed inside IR35 by has become a very real possibility, thousands of contractors are wondering exactly what they should do if the worst should happen.

Remember, you have the right to appeal. While you aren’t making the decision yourself, you are not completely powerless. Last year’s consultation document revealed that contractors will be able to dispute against the tax and NIC liability where they are ‘caught’ by the new rules.

If you think you have been taxed incorrectly, you can submit a repayment claim to HMRC, who will decide if you’re due a repayment of tax or NIC, and repay you if that’s the case. Guidance on tax overpayments and underpayments can be found here. That said, this is likely to trigger a HMRC review before they agree to any repayment.

Don’t rule out help.

Given the complexity of IR35, you might want to call upon expert advice. An unbiased view of the situation often helps, and professionals are there to make realistic, experienced recommendations – not just to go along with the outcome you’re after. Like I say though, this is entirely up to you.

Make your case.

Put forward your case to your client, and ask them to re-evaluate. There’s every chance that you have extra information they haven’t considered when using HMRC’s ESS Tool to set your IR35 status.

Failing that, push on.

Assuming The ESS Tool once again determines you inside IR35 – a decision which you strongly oppose – it’s time to contact HMRC and ask for a review.

Gather the facts.

Gather the facts and information that best presents your case. Taking on HMRC is a big challenge, and Status Inspectors are beginning to look into cases meticulously. So needless to say, it helps to have an expert on your side, supporting every argument put forward by case law.

Don’t stop there.

Let’s assume HMRC agree with your public sector client’s decision – which might be likely if they’ve used the ESS Tool, built by HMRC themselves. The next step is to take your case to tribunal. Be as sure as possible about your chances of winning though, because representation isn’t cheap.

As mentioned, if your public sector client has set your IR35 status using HMRC’s ESS Tool, it’s unlikely that HMRC will disagree with the decision. Your best chance of having this overturned will depend on how your public sector client has used the tool, along with facts about your working relationship.

Qdos Contractor are UK Contractor specialists and a leading authority on IR35, providing expert IR35 advice, business insurance, IR35 contract reviews & insurance. One of iContract’s main service partners, any contractor using the iContract platform can contact Qdos for any contractor or IR35 enquiry they may have.

Find out more about Qdos by visiting their site here.

iContract offers peer to peer interaction as well as access to a number of respected industry advisors on matters key to contractors such as accountancy, mortgages, pensions, insurance and more.

Launching soon, pre-register with iContract and begin your contracting journey today.