Feeds

IR35 ‘escape case’ knocked down by legal experts

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

  • alert
  • submit to reddit

Reducing security risks from open source software

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

Eight steps to building an HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.