'IR35 Friendly' Contracts not really so friendly

[LisaContractorUmbrella]

A judgement was handed down from the Supreme Court 27/7/11 in the case of Autoclenz v Belcher; despite the fact that the contractors had a written contract which had a substitution clause and no mutuality of obligation the workers were still considered, by the court, to be employees and not contractors.

http://www.supremecourt.gov.uk/docs/...8_Judgment.pdf

[eek]

A judgement was handed down from the Supreme Court 27/7/11 in the case of Autoclenz v Belcher; despite the fact that the contractors had a written contract which had a substitution clause and no mutuality of obligation the workers were still considered, by the court, to be employees and not contractors.

http://www.supremecourt.gov.uk/docs/...8_Judgment.pdf

Have you read the full judgement I haven't read the gory details yet but note the following example they used:-

Contract from 18 June 1991 with no right to substitution but avoiding employing them direct.

review in 2004 stating they looked and smelt like employees.

New documents in 2007 try and get them outside IR35. Working practice don't seem to change but the document pretends that they have.

Now given that information they really were taking the mickey here and I'm surprised the judgement wasn't an awful lot short. f*** off you are taking the mickey seems would have been my learned opinion and response.

[LisaContractorUmbrella]

Actually I have read the whole thing Eek and oddly enough the learned opinion was very much the same as yours..only with more words in

[NotAllThere]

..the ET was entitled to hold that the documents did not reflect the true agreement between the parties and that, on the basis of the ET’s findings, four essential contractual terms were agreed:

(1) that the valeters would perform the services defined in the contract for Autoclenz within a reasonable time and in a good and workmanlike manner;
(2) that the valeters would be paid for that work;
(3) that the valeters were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and
(4) that the valeters must personally do the work and could not provide a substitute to do so.

See in particular, per Aikens LJ at para 97. It follows that, applying the principles identified above, the Court of Appeal was correct to hold that those were the true
terms of the contract and that the ET was entitled to disregard the terms of the
written documents, in so far as they were inconsistent with them.

Working practices override the contracts. Which we knew already.

[TestMangler]

Working practices override the contracts. Which we knew already.

But only if the one or more of the parties dispute the contracts.

IR35 cases are different, in that it's is a 3rd party disputing the validity of a contract between two other parties.

I assume these valeters were 'sole traders' then.

[Fred Bloggs]

Surprises and disappoints me that cases like that go as far as they do in the judicial system. What a waste of time and resources.

[eek]

Surprises and disappoints me that cases like that go as far as they do in the judicial system. What a waste of time and resources.

It doesn't surprise me but it does disappoint me. It was a clear case of caught by IR35 but trying to avoid it as a tax dodge.

Worse its designed to allow them to pay their workers peanuts.

[meanttobeworking]

Out of interest, what would happen if you had a really "IR35 caught" contract but your actual working practices were outside IR35?

[craig1]

Worse its designed to allow them to pay their workers peanuts.

As my understanding goes, that's exactly what IR35 was meant to accomplish. It was never meant to be a tool for beating contractors who earn substantially more than permies.

[northernladuk]

Out of interest, what would happen if you had a really "IR35 caught" contract but your actual working practices were outside IR35?

You would be flogged and throw to the lions for being such a moron you allow your contract to look IR35 caught when the most important thing is fine.

Either that or the contractor in question would ask what to do on here when I am not having a good day. Either way, much the same end.