back to article HMRC contractor scores IR35 payout after yet another taxman blunder

A self-employed contractor has scooped thousands of pounds from HM Revenue and Customs after the British tax body used its controversial CEST online tool to wrongly determine her tax status. Susan Winchester, a marketing and business development consultant, dragged HMRC, Kinect Recruitment Ltd, and three others, to the Central …

  1. Anonymous Coward
    Anonymous Coward

    Next:

    Employer's pension contributions.

    1. macjules Silver badge

      Re: Next:

      More like:

      "Next: HMRC admits to being hoist upon it's own petard."

      1. Aladdin Sane Silver badge
        Headmaster

        Re: Next:

        Its

        1. MiguelC Silver badge

          Re: Next:

          although you might posit they are their own petard....

      2. Velv Silver badge
        Boffin

        Re: Next:

        "Next: HMRC admits to being hoist upon it's own petard."

        HMRC will NEVER admit there is anything wrong. To do so would open the doors for anyone previously misclassified to recover back payments.

        They will either just go quiet, or more likely declare a new target.

      3. IceC0ld Bronze badge

        Re: Next:

        "Next: HMRC admits to being hoist upon it's own petard."

        ===

        more chance of the Daleks climbing stairs .........................

        1. AH

          Re: Next:

          Daleks don't climb stairs - they level the building.

          HMRC have about the same level of subtlety and attention to fine detail when it comes to the fleshy bodies of taxpayers.

        2. TheVogon Silver badge

          Re: Next:

          "more chance of the Daleks climbing stairs ........................."

          See http://www.themindrobber.co.uk/new-doctor-who-dalek/dvd647-.jpg

  2. John Mangan

    Good!

    This space intentionally left blank.

  3. Whitter
    Flame

    "HMRC settled the tribunal case immediately before it was due to start"

    Settling at the last minute should be seen as a form of willful obstruction.

    Public bodies in particular should be constrained from using such a tactic, as the interest of a public body should be getting it right ASAP, not "winning".

    </rant>

    1. Anonymous Coward
      Anonymous Coward

      Re: "HMRC settled the tribunal case immediately before it was due to start"

      >Settling at the last minute should be seen as a form of willful obstruction.Public bodies in particular should be constrained from using such a tactic.

      I suspect it is more incompetence by not furnishing their legal counsel with the correct information until the last minute, we are dealing with public bodies here so always assume incompetence first and maliciousness second.

      1. Tom 38 Silver badge

        Re: "HMRC settled the tribunal case immediately before it was due to start"

        Then the damages should have been trebled because of its incompetence - if there is no penalty for incompetence, then they will continue to be incompetent.

        1. grizzlybaz

          Re: "HMRC settled the tribunal case immediately before it was due to start"

          If there were penalties for incompetence, great swathes of the civil service would be out of work.

          1. Intractable Potsherd Silver badge

            Re: "HMRC settled the tribunal case immediately before it was due to start"

            @grizzlybaz: True, but then so would great swathes of private enterprise employees. Incompetence is pretty much universal, with small pockets of [temporary] hope for the human race.

      2. Doctor Syntax Silver badge

        Re: "HMRC settled the tribunal case immediately before it was due to start"

        "always assume incompetence first and maliciousness second"

        This is HMRC. Assume the tax inspector has financial targets to meet. Neither incompetence nor maliciousness need be assumed when self-interest enters the picture.

      3. ACZ

        Re: "HMRC settled the tribunal case immediately before it was due to start"

        Here's the decision... https://www.gov.uk/employment-tribunal-decisions/ms-s-winchester-v-commissioners-for-hm-revenue-and-customs-and-others-2207946-2017 - brief, but an indication of the time and money that will have been spent on this.

        I suspect that it's the (unfortunately) regular occurrence where it's only when somebody who actually understands the law (so in this case, clearly not HMRC themselves) gets hold of the case that the right thing finally gets done. Let's hope that the whole court proceedings process hasn't been too much of a toll on Susan Winchester or her business. Could this be the death knell for CEST?...

    2. Doctor Syntax Silver badge

      Re: "HMRC settled the tribunal case immediately before it was due to start"

      "Settling at the last minute should be seen as a form of willful obstruction."

      "Steps of the court" settlements are fairly common in civil cases. Quite likely either this is their first meeting with their barrister after he's had a chance to review the case fully and to negotiate with the palintiff's lawyers. I know it's usual here to condemn lawyers but they can be more amenable to negotiating than their principals.

  4. Anonymous Coward
    Anonymous Coward

    No, it's probably HR so malicious twattery throughout

    HR in public bodies is malice incarnate.

    I recently helped my wife with a grievance against Teeside University, arising from the employment of a new director. A new director who couldn't be arsed to do due diligence like reading his staff's job descriptions, and who then proceeded to promote some grinning twat to a position that encompassed his job and hers, all without the application of HR's actual documented processes.

    When my wife eventually raised a grievance, said director with HR support was allowed to mark his own homework, make blatantly discriminatory comments and generally continue to undermine her at work. On appeal, some adults turned up and basically said everything he had done was wrong.

    The damage is, however largely done, and the grinning twat is still working on destroying her position, as he was basically promised her job by his (now former) director.

    1. Peter Galbavy

      Re: No, it's probably HR so malicious twattery throughout

      You give me visions of "Evan" - Simon Pegg's character in Black Books.

    2. Anonymous Coward
      Anonymous Coward

      Re: No, it's probably HR so malicious twattery throughout

      Seen very similar in other "agencies" where directors seem to be utterly uncontrolled by HR until some serious damage is done to people.

  5. Scroticus Canis Silver badge
    Happy

    Beautiful

    Just plain beautiful.

  6. Franco Silver badge

    Talking to HMRC is much like the "these go to 11" conversation in This is Spinal Tap. Wilful lack of understanding on HMRC's part, I don't know how many times they've been told their IR35 reform is nonsense and that taxing people as employees incorrectly would lead to demands for equivalent benefits, but they don't listen and will still force the reform in to the private sector.

  7. The Original Steve
    Stop

    Sad

    I left my permie role in August and didn't have something to go straight into, so seriously considered contracting and freelance.

    After a lot of digging and research as well as getting offered a few public sector (NHS mainly) contracts I ruled it out PURELY due to the tax and IR35 ballache.

    Nightmare

    1. Mark 110 Silver badge

      Re: Sad

      Its not as bad as all that unless you consider a contract that is considered 'inside' IR35 and haven't doubled the rate to allow for that.

      As long as its not mandated 'inside' everything's fine. If it is mandated then ask for at least 50% more money. Start higher - x2!! (though 50% probably covers it)

  8. Dr Dan Holdsworth Silver badge
    FAIL

    The UK Tax Code is hideously over-complicated

    In most countries including the UK, civil courts are mostly there for when someone's got something wrong. That HMRC are being forced to go to court so many times regarding tax matters merely shows that the tax code they are trying to apply is too complicated to be useful.

    Simplifying the UK tax code would seem now to be a priority. I would think that after Brexit, the Civil Service will rapidly start to realise that without a continual drip-feed of new regulations from the EU to apply, they shall have to start thinking for themselves and at this point will realise that simplifying their own jobs is a priority.

    If they do not do so, and they won't for a while, there will continue to be a steady series of these sorts of cases.

    1. Chris G Silver badge

      Re: The UK Tax Code is hideously over-complicated

      They will never simplify taxation. If everything is laid out simply and clearly they will have no cover for their mistakes when they make them (not if).

      Complexity is the civil servant's friend.

    2. katrinab Silver badge

      Re: The UK Tax Code is hideously over-complicated

      We have the longest tax code in the world, twice as long as India which is the second longest. So not the EU’s fault.

  9. This post has been deleted by its author

    1. Brewster's Angle Grinder Silver badge

      Re: "Her firm, SJW Marketing..."

      Given her name is Susan Winchester, I think we can reasonably speculate it's her initials and that her middle name is Jane, Jennifer, Julia, etc...

      1. katrinab Silver badge

        Re: "Her firm, SJW Marketing..."

        It is Susan Jane Winchester

        https://beta.companieshouse.gov.uk/company/08372975/persons-with-significant-control

  10. Nematode

    Again, TG I'm retired. I was never afraid of losing an IR35 case, but Very Afraid of having to fight one. Glad to see what we used to call (in the fledgling PCG as it was then) the nuclear option being rolled out.

    1. Gordon 10 Silver badge

      Newsflash. Retirement wont stop HMRC coming after you if they think you have done something wrong.

  11. Anonymous Coward
    Anonymous Coward

    HMRC are morally bankrupt and their position is indefensible

    Ooh where to start. Through my contacts I know which consultancy was contracted to author CEST. I also know that in the run up to April 2017 they were assured that their many contractors working on a myriad of HMRC projects in addition to CEST would be ruled outside IR35. Until of course HMRC ruled every single one of them inside. After more than half had left the consultancy entirely or asked to be reassigned to non-government projects, HMRC capitulated. Inside three months. All of a sudden everybody was, actually, outside IR35. Fancy that! HMRC incorrectly assessing 50+ freelance workers! On their own projects!

    By then the damage had been done and a number of projects pretty much ground to a halt. It would seem that not only did HMRC make sweeping assertions about all these people being inside IR35, they then made further sweeping assertions to the contrary when they realised what the impact on their business was. That this has never really been pointed out in public like the king's new clothes story that it is has always astounded me. If my company had been awarded the contract I would have withdrawn from it as soon as the detail of was being proposed was apparent. Yes the tool would have been built anyway but I have my red lines and I stick to them. No gambling work, no banking work, and nothing else that is either parasitic in nature or morally questionable.

    In my opinion CEST is an insidious tool for the following reasons: It has been very craftily concocted to ignore mutuality of obligation so that the vast majority of contracts appear incorrectly to be inside IR35. If the end client doesn't use the tool, or disagrees with the result, HMRC insist that they are liable for any tax/NI underpayment in the event that an investigation succeeds in putting a consultant inside IR35. So the end client has a huge risk hanging over them, incentivising them to (a) use the tool and (b) not go against its usually incorrect outcome - we all know the tool doesn't reflect case law.

    HMRC succeeds in increasing their tax take without changing the law around IR35 at all; instead it acts like a mafia protection racket - "it would be a shame if your 20 contractors were suddenly ruled inside IR35 and you had huge penalties to pay. Better just to assume they are and pay up on their behalf."

    This kind of underhand practice is morally indefensible but then my own experience of HMRC business analysts in the past leaves me not surprised in the least. "We don't care what tax they are supposed to pay, or even that we might cause hardship by knowingly over-taxing" I heard one BA state in an analysis meeting a decade ago. "We want to put them in the highest tax bracket we can get away with and take as much money off them as we can from day one. If we eventually have to give them some money back, then so be it". I couldn't wait to get off the premises. Public servants should never behave in this way. I found a new contract as quickly as I could manage and vowed never to work for HMRC again. And when I heard about the planned introduction of CEST, not to work on any government project, however remotely connected I might be. Ever.

    Anonymous coward - I wonder why...

  12. Peshman
    Coat

    C'est fini?

    I'll get my coat...

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