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A report out a couple of days ago on Accounting Web about a recent IR35 case where the contractor lost.

IR35 is a notoriously unpredictable battlefield – some cases HMRC win, some the taxpayer, and often its hard to see tangible distinctions.  In some cases its even gone down the middle at tribunal with some contracts being IR35 caught and some IR35 outside.

In this case there appears to have been pointers for and against IR35 applying, but the point that sealed it seems to be the personal service requirement given the high security nature of the clients work, banking.

Taken to extremes this may imply that banking contracts are more vulnerable to being IR35 caught, but it will always depend on the facts.  Perhaps the best things anyone in doubt can do are:

  • Make sure contracts are reviewed
  • Have practical confirmation of how things like substitution clauses would be used in practice.  In this case there was a substitution clause but it was ruled it could not have been used in practice – might the case have been different if there was a consensus between client and contractor showing that substitution could be used, and security issues worked around?
  • Keep a portfolio of outside IR35 evidence