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An interesting case report in our professional journals this week about IR35.

The case is ECR Consulting and the interesting – and pleasing – part about the decision relates to hypothetical contracts.

Quoting from the case report:

“Unlike many of the case we have been referred to, this case has two agencies- Best/Spring and ECR. Miss Richardson was not a party to the contract between VDS and Best/Spring. As submitted by Mr Boddington, we accept that, where the parties have entered into formal contracts, the terms of those contracts have to be imported into the hypothetical agreement between Miss Richardson and VDS.”

Hypothetical contracts, a unique part of IR35 status determinations, have histrocially been just that – hypothetical – and for the tribunal to expressly state that the negotiated terms have to import to the hypothetical contract is a welcome step forward and negates significantly the HMRC approach of constructing a hypothetical contract which is slanted in favour of IR35 applying.