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HMRC have recently lost an IR35 case at tribunal – we don’t see many cases come to tribunal these days, so its worth looking at those which do.

The case is MDCM v HMRC [2018], and the IR35 assessments by HMRC failed because HMRC alleged that the level of control over the directors work, as a contractor, was akin to that of an employment relationship, whereas the tribunal found the control was merely a headline instruction as to what needed doing.

In a nutshell this sums up control for IR35/Employment Status purposes.  In an employment relationship control is detailed, including dictating when, where and how work is carried out.  In a self employed/contracting relationship, the control is more around what has to be done.  By necessity a specification of what the work is may also specify location and elements of process, but as a secondary issue.   In this case the contractor was a site manager, and the control was headline around tasks to be done; by implication they would need to be done on the site that was being managed.  So although location and nature of the work was specified, there was no right for the engager to move the contractor or dictate changes to the scope of the work.  In fact the tribunal heard important evidence that the engager had to seek the contractors consent for redeployment to another site – in an employment relationship no consent would be needed.

The case reinforces that for control to be a factor in rendering services within IR35, the control must be detailed, process driven, and akin to a typical employment scenario.  A headline definition of tasks and location doesn’t amount to such control.

There are a couple of more detailed commentaries on this case available:

Ross Martin: HMRC lose latest IR35 case

Taxation: IR35 does not apply