IR35 - Taxman loses in the Novasoft case

The taxpayer’s appeal was allowed in full by the Commissioners against the HMRC. The tribunal decided that this was a case of “self-employment” and therefore the dreaded IR35 legislation (intermediary companies) did not apply. In reaching it verdict the tribunal quoted the Hall V Lorimer, that it is necessary to “paint a picture from the accumulation of detail”. It will be interesting to see if HMRC takes this case to further appeal although it will be more interesting to see what impact this case will have on the IR35 legislation.

(Note: IR35 is a complex set of rules introduced to catch disguised employees falsely trading through their own limited companies to reduce their tax. The problem lies in its complexity itself and in that it has in some cases it has unfairly treated genuine self-employed).