IR35 turnaround?

A court case last week could signal a change of emphasis for the infamous IR35 tax. To date, these rules apply such that a contractor working for a large business through their own personal service company could be stung for increased taxes if they fall foul of the IR35 rules.

However, the case of Muscat v Cable & Wireless was decided such that the contractor can be deemed to be an employee of the large business rather than the contractor’s own peronsal service company.

Although this was only an employemnt law case, if the precedent becomes extended to tax law, the increased taxes would fall on the large business rather than the contractor’s personal service company, thus turing IR35 legislation upside down.

We will, of course, bring you any developments as they happen.