Tax tribunal summary: RALC Consulting Ltd v HMRC [2019]

In this Tax Tribunal case, an IT consultant successfully appealed HMRC's decision that his engagements with both Accenture and DWP over five years amounted to 'deemed employment' under IR35.

Although the consultant had been a previous employee of Accenture (and had worked on projects for DWP during this time), the tribunal was satisfied that there was a clear distinction between his period of employment and his period of consultancy, with no mutuality of obligation present in the latter.  

The tribunal was satisfied that both the written contract and the practical reality of the engagements reflected a genuine self-employed arrangement: the consultant agreed the work to be done up front, billed only for work actually completed and, on one occasion, had a project cut short at late notice, losing ten days' work without payment. 

You can download and read the full decision here.

Why the IT contractor was self-employed under IR35

There was no minimum obligation on either Accenture or DWP to provide the consultant with work and he was not able to charge for simply making himself available – mutuality of obligation was therefore lacking.

The consultant had the right (albeit a fettered one) to provide a substitute and could demonstrate that he had sought to rely on this right on one occasion - personal service was therefore lacking.

Whilst the clients had some control as to the 'when' and 'where' of the provision of the services, the 'how' and 'what' was largely controlled by the consultant, such that the level of control operated by the clients was insufficient to amount to an employment relationship.

The consultant could and did work elsewhere during the continuance of the engagements, bore the cost of his own insurance, had his own business premises and was not generally perceived as being 'part and parcel' of either organisation – the other factors therefore did not support a relationship of employment.

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