IR says you are, Employment court says you arent...

**malvolio** · 31 August 2005, 19:29

Yes, it is a thought. Snag is, the Revenue and the Employment tribunals use different criteria (God knows why...). So it won't wash I'm afraid.

However if you've got a CP/Hays/Spring contract and are required to use a given PSL of brollies, have opted in and are paying IR35, why not ask for four weeks paid leave, pension contributions, protected employment and expenses, just like the real employee they are pretending you actually are - and see how long your contract lasts!

The whole thing with the big agencies is that they are rapidly returning contractors to 18th Century conditions of employment - you work for us but you have no rights. When are the turkeys going to notice Christmas coming, I wonder?

**Not So Wise** · 31 August 2005, 21:19

Be a hard one though generally at the end of the day Courts > IR.
So if IR classed you as employee, courts said you were not you could then most likely take IR to the courts and be virtually guaranteed to win.

Though dieing for the day that someone gets classed as an employee by IR, takes them court and courts agree with IR and that person then decides to follow it up by going after their "employeer" for their missing benefits/rights, because day that happens we will all finally start seeing agencys and clients looking for IR35 friendly contracts

**ASB** · 31 August 2005, 21:48

Originally posted by Not So Wise

So if IR classed you as employee, courts said you were not you could then most likely take IR to the courts and be virtually guaranteed to win.

Absolutely not I'm afraid.

If you go to an ET and get found to be an employee then this is a real live bona fide pukka employee. You'll get all your tax back, the employer will have to pay it and all sorts of good stuff.

But you won't win. (Or at least are extremely unlikely to). The most likely reason for faiure is that there is no contract between you and the actual client. That's it. Game over case lost. The same would be true if you tried it with the agency.

Now, when the IR come along and present you with the IR35 bill that doesn't change a thing. This is based on a complete fantasy. Can't remember the exact wording but it's along the line of "would have been an employee were it not for the presence of the intermediary". (i.e. your co, agency and anybody else in the chain between you personally and the end client). So it is perfectly possible to fail this fantasy contract.

I do, however, think it very unlikely that the IR would persue an IR35 enquiry after somebody has failed at an ET - after all that sort of press is likely to blow up them.

**Not So Wise** · 31 August 2005, 23:59

Err confusing me there, quote you took was if Court said you were not an employee then you give example of court saying you are, total opposite.
Quote wrong paragraph by chance?

**ASB** · 1 September 2005, 09:15

Don't think so.

Originally posted by Not So Wise

Err confusing me there, quote you took was if Court said you were not an employee then you give example of court saying you are, total opposite.
Quote wrong paragraph by chance?

The scenario you were putting forward was (unless I misunderstood?).

1) IR says you are IR35'd
2) Court says you are not an employee

You then asserted that you would then win a case against the IR.

I'll try again since I obviously caused you some confusion

The IR do *NOT* find you to be an employee. What they actually find is that you *would* have been an employee had you (individualy) taken the contact with the client. [For the purposes of this test they invent the actual control to test - because the law requires them to do this]

A consequence of this is that a charge to income tax will generally arise on the deemed salary enshrined with the finance act. A further consequence is that a chare to employers NI will also generally arise.

[Some people think of this as being an employee for tax purposes]

Now, you get the hump and take phase 2. Off to the employment tribunal.

Now their job is to decide firstly whether you were an actual employee of the client. How do they do this? Firstly they look at the actual contracts. So where is the contract between NotSoWise esq (i.e. you personally) and TheClient plc.

Spot of a problem there no? There isn't one. If the client and/or any other intermediaries have been exceptionally stupid then you might just be able to construe one, otherwise you have already fallen at the first fence. [You might like to look at the recent cable and wireless EAT judgement. Here somebody was found to be an employee even though they had a company in the way but this was fairly unusual and was largely related to the TUPE regs, nevertheless it may yet prove useful if the appeal is not won by C & W. However if the appeal is lost I think you can expect some changes in the law].

So, the bottom line is:-

IR say "IR35" applies
ET say "not an employee"

if a perfectly tenable position - they test radically different things.

**Mailman** · 1 September 2005, 10:52

I would think that if the ET found you WERE NOT an employee and at the same time IR says you are LIKE a permanent employee that you would have more than reasonable grounds to take IR to court.

Still...I reckon it would be an interesting case none the less.

Now their job is to decide firstly whether you were an actual employee of the client. How do they do this? Firstly they look at the actual contracts. So where is the contract between NotSoWise esq (i.e. you personally) and TheClient plc.

You have explained exactly what IR does in IR35 cases. They look at both the contract between yourself and the end client and the contract between the end client and the agency and then determine whether you are like a permanent employee.

And lets not kid ourselves...everyone here has a contract that exists between themselves and the end client.

Mailman

**Sionner** · 1 September 2005, 11:34

Employment status

"I do, however, think it very unlikely that the IR would persue an IR35 enquiry after somebody has failed at an ET - after all that sort of press is likely to blow up them" - The IR decided not to challenge me under IR35 when I lost my claim to be an employee of my client in the ET and EAT.

I believe the following is now a valid strategy, if the IR decide you are "caught" by IR35, and they will not back off, ask for your employment status to be determined by the ET and challenge the IR to accept the ruling. I reckon they'll back off then. Of course the individual would have to judge the effect on the client.

Just for the record, no one individual has, for the same engagement, been found to have an opposite employment status by the alternate court. For that matter, I believe no one individual has had both courts judge on the same engagement.

**tim123** · 1 September 2005, 12:18

Originally posted by Sionner

"
I believe the following is now a valid strategy, if the IR decide you are "caught" by IR35, and they will not back off, ask for your employment status to be determined by the ET and challenge the IR to accept the ruling. I reckon they'll back off then. Of course the individual would have to judge the effect on the client.

No, it is not a valid startegy. If you don't like the IR's ruleing on status for an IR35 enquiry you have the option of appealing that ruleing though the courts and get them to decide your status. But it will be a status based upon the notional contract.

Suggesting that the IR should accept an ET status based upon the real contractal position with get you nowhere.

tim

**ASB** · 1 September 2005, 12:18

Kidding oneself

Originally posted by Mailman

And lets not kid ourselves...everyone here has a contract that exists between themselves and the end client.

Mailman

But why do you believe that? It is possible that you do, but it is certainly not the norm.

Anyway back to the original point. It is entirely possible that the IR for IR35 purposes and an ET/EAT for employment purposes come up with different answers. This is simply because they are being asked different questions. You may like to think that they are being asked the same one - they are not. It really is that simple.

But, and it's a big but. Any sane person would look at that and say "no mate you're 'avin a larf".

So what is likely to happen in practice:-

1) You go to an ET and lose. IR then come at your for IR35. You say "but the ET said I ain't an employee".

Well, the IR could do that. They almost certainly would win. But will they actually do it? IMO very unlikely. I think a previous poster has had some relevant experience in this area [smile].

2) IR Come at you for IR35. Whilst this is going on you go to the ET and lose. The IR will almost certainly quietly concede. [I don't know if this has actually happened to anybody in practice].

3) IR come at you for IR35, you pay up and then go to an ET. They say "not an employee". You then try and get the year reopened to get the cash back. I suspect you would fail. The year can only be reopened with new information and anyway in the determinination you have probably signed a "this is final and I've told you everything" agreement.

What I want to see is this (but not to me!):-

- Lose at ET - not an employee
- Lost at IR commissioners, contractural terms/arrangement imply disguised employee.

When this happens (I suspect shortly after hell freezes over) then the total stupidity of it all will be unmasked, the press and any anti IR35 bodies will be able to make huge political capital. I rather i magine that is the reason that the IR have been known to go away after losing an ET. **

Whether or not going to an ET is a sensible thing in the first place is an entirely different matter.

** Edit. Didn't phrase that well. I meant after an individual has gone to an ET and lost

IR says you are, Employment court says you arent...