IR35 case ping-pongs back to the Commissioners
A controversial IR35 case has been ordered back to the General Commissioners by the High Court.
The case involving Larkstar Data Ltd has already been heard in the General Commissioners where the result was a victory for its owner, Alan Brill, who successfully represented himself. This case is unusual in that it was HMRC who appealed it to the High Court last year. The High Court has now ordered that the case be re-heard by a different panel in the General Commissioners.
Managing director of the Professional Contractors Group (PCG), who is supporting the case, John Brazier said: "This case shows how important it is to have expert advice from the earliest stage. Larkstar's owner Alan Brill did very well to win his case at the General Commissioners, but he now faces the prospect of having to go through it all again - only this time he will have the support of PCG's advisers."
Misdirected
In the High Court, Sir Donald Rattee decided that the case should be re-heard on the grounds that the General Commissioners misdirected themselves in law. Specifically, he found that they failed to consider authorities that the Revenue referred to them, and so did not take all arguments into account. Sir Donald upheld only one of the Revenue's four grounds for appeal, but that is sufficient to ensure that the case has to be re-heard.
The Commissioners are the first legal stage of settling a dispute with HMRC. There are two types of tribunals involving Commissioners: General Commissioners, who are unpaid lay individuals, and the Special Commissioners, who are paid legally qualified judicial officers.
Mr Brazier said: "This case illustrates why PCG's advisers have historically always taken cases to the Special Commissioners rather than the Generals.
"The Generals are a lay tribunal, which increases the chances of this kind of error compared to hearings before the Specials, who are professionally qualified. However, this system is set to be replaced by a new set of wholly professional tax tribunals on April 1 - it is not yet clear whether the re-hearing will be under the old or new system. Either way, it certainly seems fair to say that all is not lost in this case by any means."
No formal written judgment was published by the High Court, but a transcript of Sir Donald Rattee's remarks is available from the PCG's website - see 'Larkstar IR35 case - A transcript of the High Court's ruling'.