This Content Was Last Updated on April 21, 2020 by Jessica Garbett


Hot on the heels of Ackroyd, which HMRC won, and MDCM, which HMRC lost, and both decided largely around control, HMRC have lost another IR35 case on control – Jensal Software.

Interestingly the top level contract, between agent and client, referred to the contract being subject to “Supervision, Direction and Control”, which you think would be fatal, but, correctly, the tribunal went behind this to look at working practices.  They found that the control exercised by the client “did not amount to ‘supervision’ as such, but rather to ensure that the contractor understood the nature of the DWP’s request and that all workers understood how the task was to be carried out.”

Embarassingly the client in this instance was a public sector entity, which shows the difficulty HMRC has with contract and freelance arrangements on its doorstep, let alone wider.  The case was for a period pre the Public Sector IR35 rules, but remember these rules change the mechanism of IR35s operations not the fundamental principles of employment status.

Bottom line, HMRC had confused high level control over what was being done with detailed control on how it was done.  The latter must exist for control to be established for employment status.  For an engagement to be one of disguised employment, and hence caught by IR35, there must be sufficient control, mutuality of obligation and personal service obligation – if one of these is missing a contract cannot be inside the IR35 regime.