Fear that IR35 rulings will be applied retrospectively by the Revenue

Don't forget that the IR has a particular penchant for the retrospective application of court rulings. The Atkins v Miners appeal decision and the ensuing Inland Revenue rape of small business is a prime example – one that is still ongoing even though subsequent legislation has reversed the very premise on which their harassment is based.

This is the ultimate sting of IR35. It ventures into uncharted legal territory about which even the Inland Revenue and the finest legal minds disagree. The principal confusion is caused by asking a court to hypothesise a relationship between two parties and to then pass judgement on that supposition, hardly a concept with which the legal system is familiar. It is rarely asked to make up the facts on which to reach a decision.

Nobody knows how this will operate. The Inland Revenue published its view of who it deems the client to be as far as the legislation is concerned on its WEB Site as an answer to a FAQ on the 7th of this month. This view is disagreed with by most legal and tax experts operating in the field.

Imagine the position if the legal position is clarified by precedent using some test case brought by the Inland Revenue in five years' time. The entire basis of rulings up until that decision will change and the IR will take every opportunity to use it in retrospect to selectively put small businesses out of business.

The cumulative sums involved will be enormous and induce bankruptcy. It is no use pretending the IR is bound by its previous ruling, it specifically places an exclusion to that effect on every ruling it issues and has a history of doing just that in the past.