06-12-2019

Richard Alcock was contracted to carry out work for the Department of Work and Pensions and Accenture, supplying IT services through his company RALC Consulting Ltd. Following an IR35 investigation by HMRC, Mr Alcock’s company was deemed liable for unpaid tax amounting to £243,000.

The first-tier tax tribunal (FTT) concentrated on three specific aspects of the case, mutuality of obligation (MOO), substitution and control.

Following are some of the main points of the case:

  • There was no mutuality of obligation between Mr Alcock and DWP.
  • There was no obligation for Accenture or DWP to provide a minimum amount of work.
  • There was only an obligation for Accenture and DWP to pay Mr Alcock if work was offered and undertaken and furthermore.
  • There was a substitution clause in the Accenture and DWP contracts, which meant that both clients could consider and decide whether to accept substitutes offered by Mr Alcock.
  • There was no significant control over what work Mr Alcock performed and how he carried out this work within the specified projects.
  • Mr Alcock was required to agree with both clients, the best way to deliver the particular part of the project for which he was responsible for.
  • Advance notice had to be provided to both clients of any holidays or non-working days he was taking, and that notice could not be unreasonably refused.
  • The work was conducted at the clients’ offices unless working at home or outside reasonable hours.
  • Both clients were required to be informed when he was working from home, and they could not unreasonably refuse his request.
  • Mr Alcock was allowed to work for other clients during the course of the project as long as this did not interfere with the delivery of his projects.
  • Mr Alcock was not entitled to any company benefits such as sick pay, paid holiday or pension entitlement.
  • Mr Alcock could not represent, deputise or act on behalf of the clients.
  • Both contracts were for fixed terms and based upon delivery of specific projects.
  • Payment was at an agreed daily rate of pay.
  • The FTT had to decide whether a hypothetical contract between the worker and the end clients, would have constituted an employment contract or not.

    The tribunal after considering all of the facts presented before them found that an hypothetical contract was in place. The case was ruled in favour of Mr Alcock and RALC Consulting Ltd.

    Although this case was made in favour of the taxpayer, if the decision is taken to appeal by HMRC, which it is thought to be quite likely, the decision by the FTT could well come under much further scrutiny from the upper tax tribunal.

    The full transcript of this case can be found here.


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