Feeds

IR35 ‘escape case’ knocked down by legal experts

Of course employment law and tax law are unrelated (eh?)

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

The case of Martin O'Murphy vs Hewlett-Packard - which has been viewed by many as an effective escape to IR35 - will have little bearing on the widely-criticised tax legislation, legal experts have warned.

The unfair dismissal case, started in March this year and closely followed by Web site AccountingWeb, concerned IT contractor Martin O'Murphy and his relationship to HP, where he had worked for six years as a contractor.

A Tribunal Appeals ruling finally decided that Mr O'Murphy was not an employee of HP, leading many to believe it could be used to undermine the unpopular IR35 tax legislation. However, Baker & McKenzie employment partner Sarah Gregory and legal expert Rebecca Seeley Harris (who frequently covers IR35), have both dismissed its importance, stating that employment law and tax law are two very different beasts and that the definition of employment in one need not affect the definition in the other.

Gregory was quoted on AccountingWeb as saying the case "was merely saying that the contractor was not an employee of HP, but such contractors could still fall foul of the IR35 rules because they would be classed as employees under those rules and their own service company would then be responsible for deducting income tax."

Seeley Harris argued for the different approach in different areas of law, saying they maintain "the flexibility of the law which, when it goes against you seems to be a travesty but, when it goes in your favour appears to be justice". That the Tribunal is also fairly low down on the court hierachy, whereas IR35 has been debated in the High Court, also makes the case less significant than first thought.

The relationship between contractor and company forms the basis of the controversial IR35 tax legislation, which many in the industry say is unfairly disadvantaging them and is evidence that the UK government doesn't understand the knowledge economy.

Mr O'Murphy hired himself through his own company to an agency which then had a service contract with Hewlett Packard. HP terminated its contract with the agency abruptly in 2000. A tribunal initially decided Mr O'Murphy was an employee but this was overturned during an appeal, which said he wasn't.

If you want to know more, check out AccountingWeb's latest story here.

Related Stories

PCG appeals against IR35 ruling
IR35 judicial review over
IR35: the govt's viewpoint
IR35 protesters enter High Court
IR35 High Court date set
CBI, FSB, PCG ask for rethink on IR35

Providing a secure and efficient Helpdesk

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
New hybrid storage solutions
Tackling data challenges through emerging hybrid storage solutions that enable optimum database performance whilst managing costs and increasingly large data stores.