Qdos took this case on from a firm of accountants who, following a two-year battle with HMRC on behalf of their contractor client, felt they could no longer fight HMRC effectively.
In taking on the case, Qdos' Head of Tax compiled an effective case for dismissal which reversed HMRC's decision that the contractor was inside of IR35, saving the contractor as estimated £20k in tax.
Qdos were approached by a firm of accountants in London to help their IT contractor client who had been in a two year battle with HMRC. The contractor had supplied their services to a multinational pharmaceutical company which HMRC had decided was caught by IR35.
The IR35 enquiry commenced in the autumn and within the first few months of the new year, the contractor had held a meeting with HMRC. Unfortunately, at that meeting, the contractor said that they believed they had no right of substitution and confirmed that the end client did have certain rights of control over the contractor's work.
That summer, HMRC had met with the end user and by Christmas of that year, gave their opinion that IR35 applied. Despite the contractor’s accountant putting forward some good quality counter evidence and arguments the Status Inspector, known to Qdos as being particularly stubborn and awkward, was not for turning. In the following May, the accountant enlisted the services of Qdos to take up the case.
After a few months of reviewing the evidence and speaking to both the contractor and a particularly helpful contact at the end client, Qdos were able to present new improved evidence to HMRC which was set out in a 3-page letter.
A month later, HMRC responded by reversing their initial decision on the basis that they had to concede that there was an absence of control and personal service.
Although no formal PAYE tax and NIC assessments were raised by HMRC, it is estimated that Qdos’ intervention saved the contractor nearly £20k in tax (net after corporation tax relief).
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