IR35 victory takes five years

A freelancer has finally won his IR35 battle against HM Revenue and Customs - after five years.

The compliance visit from HMRC took place in December 2004, with the case experiencing delays of up to five months from HMRC.

The Professional Contractors Group said: "Despite the significant evidence of his business set up and the definite lack of control as to how he worked, the PCG member had been subject to HMRC's gruelling fact-finding and questioning for five years – despite the fact the company had ceased trading with no way of paying the liability!

"As with many IT contractors HMRC didn't understand what the member was doing, how he worked, what the various projects were or how he interacted with the end client – yet they apparently knew enough to decide IR35 applied."

David Harmer of Accountax Consulting took over the case from the previous advisers in January 2009.

In June 2009 the case went to independent review. Accountax compiled a six page letter to the reviewing officer detailing precisely what the services were and how the company interacted with the main client, the fundamental HMRC failings in fact-finding and failure to apply the correct tests.

On August 12 2009, Accountax received a call from HMRC confirming they were dropping the case.