Another day another defeat for HMRC


A previously unpublished IR35 judgement from 2017 has emerged, further illustrating the gross inadequacies of the CEST tool which has again failed in one of its primary purposes: simplifying IR35.

In the case of Armitage Technical Design Services (ATDS) Ltd v HMRC, as reported by Accounting Web, engineering contractor David Armitage successfully appealed a tax bill of almost £70,000.

HMRC argued that work carried about by Armitage for Diamond Light Source Ltd (DLS) between 2009/10 and 2013/14 fell within IR35. However, a First Tier Tribunal found that none of the key indicators of employment were present.

The judge found that Mr Armitage had a right to substitution and there was no absolute requirement him to carry out the work personally. Mr Armitage also worked remotely from his client, only visited DLS headquarters once and worked to his own deadline and thus there was insufficient levels of control to indicate a contract of employment.

The case is also highly significant because it explicitly rejected HMRC’s interpretation of Mutuality of Obligation (MOO).

What is worth noting here is that, though the case has only surfaced today, the judgement was announced in January 2017 – prior to the launch of the CEST tool. If HMRC knew then that the CEST tool was treating MOO as an irrelevant consideration when the tribunal dismissed this argument, why did it launch what is increasingly looking like a fundamentally flawed tool?

This is not just a defeat for HMRC, it is a damning one. This case is now just the latest in a growing list of defeats for HMRC who appear completely incapable of understanding what is an incredibly complex piece of legislation. 

The government appear completely undeterred by the mounting, undeniable evidence of the damage IR35 is causing appear absolutely determined to press on and extend the reforms from the public to the private sector.

The three recent IR35 tribunal defeats for HMRC are just a snapshot of the widespread damage that we can expect to see if the legislation is extended to the private sector. For the sake of our flexible workforce and the wider economy it drives, we urge the government to reconsider these catastrophic proposals.

Meet the author

Tom Hayward

Senior Press & PR Officer