Contractor defeats taxman in IR35 battle

The Professional Contractors Group (PCG) has won the latest round in its long-running IR35 battle with the taxman.

One of its members, Roger Tilbury from Bedford, won his case against the Inland Revenue at the Special Commissioners when the judge concluded that he should not be classed as an employee of Ford Motor Company for tax purposes.

The Inland Revenue had brought the case against Tilbury, arguing that he was a 'disguised' employee of Ford, even though his contract was actually with Compuware, to which the car firm had outsourced its application management centre.

The judge, Mr Stephen Oliver QC, took several factors into account in his nine-page judgement. These included the fact that Tilbury Consulting Limited had the "qualified right" to send a substitute but had never exercised this, that it was not the manager at Ford's function to tell Tilbury how to do the work, and that Tilbury had a different colour pass from the Ford employee one which did not entitle him to company benefits such as use of the gym.

Tilbury said in a statement after the case: "I'm delighted to have won, and relieved that it's over. It has taken more than two very stressful years to get to this point, during which time I had to put all investment in my business on hold, for fear of tying up funds."

PCG chairman Simon Griffiths said in a statement he was pleased with the judgement because it re-establishes the core principles of defining an employment relationship based upon the actual contract.

"Furthermore, it recognises even a fettered substitution clause as being inconsistent with employment, despite never having been exercised. Roger has been working for the same end client for nine years, being paid by the hour, and it's encouraging to note that the issues of control and substitution were deemed more important in determining his employment status," he said.

Just last week the Inland Revenue blamed contractors for the length of time it is taking for some IR35 cases to be resolved.