Revenue misfiles IR35 review papers then calls half the contractor's 35 points irrelevant

I am currently being reviewed for IR35.

My last response to the Revenue on this was 30th October 2002, at which point the Review was already almost 12 months old. The response was to a letter from the Revenue which basically said that they wanted to start the whole process again and interview end clients.....again!!

My accountant sent them a detailed letter, 6 pages in all, laying out the facts and the case in detail, and stating that he felt all the so called fact finding had been done and that I was not prepared to wait another year because they failed to ask the correct questions first time round.

We have now just received a response, 8 months after my letter, which begins by trying to apologise for the delay, and that it was caused by the records being misfiled!!

I'm looking for a few pointers on some general statements made within the letter, to see if you think they are as incorrect as I do.

1. The inspector is trying to circumvent the written contract by downplaying its importance, he states that if the contract was direct with the end client and not with the agent then he would pay more notice to it. I was under the impression that if an individual was contracted directly with the client then the IR35 legislation did not apply?

2. The Revenue keep going on about an unfettered right of substitution and we have again and again explained that there is no such thing, that any client has a right to stop access to their site of any individual for any reason they see fit. The substitution clause states that the client can reject the substitute during a 10 day overlap period, paid for by my company, if they find him/her to be unacceptable during this period.

3. Our last response listed all the facts for and against a contract for services. There were 35 points in favour and 2 against. The Revenue's response to this is that almost half of the points in favour are, in their words "totally and absolutely irrelevant". These points thought to be irrelevant are generally pointing toward how the end client perceived its relationship with me by drawing factual comparisons between myself and a staff employee ie a) employees worked 8.00am to 4.30pm, while I worked very irregular hours as proven by invoiced hours and time sheets.

b) Employees did not fill out timesheets, whilst I did. We have therefore argued that this shows that timesheets are not a control element but instead an accounting procedure to check invoices.

c) Employees receive all the usual benefits, sick pay, holiday pay, medical insurance, pensions, redundancy payments etc while I do not. We also made the point that the employees receive company shares which means they too will receive payments by way of dividends that do not have n.i. contributions deducted.

d) Contractors wear different coloured badges so that there is no mistaking a contractor for an employee.

e) Contractors sit through different inductions to employees.

f) Contractors do not have access to the sports and social club or access to health promotions etc going on at any time.

g) Contractors do not receive discounts etc from local stores agreed with the client.

h) There are no employees carrying out similar tasks or roles.

I can't see how these points can be considered irrelevant as they are indicators of the actual working arrangement that the Revenue seem so keen to emphasize elsewhere.

The inspector then finishes by once again saying that he wants to interview the end clients again, so we are no further down the line than we were 8 months ago. One of the individuals they wish to interview is the overall Human Resources Manager for a large multi-national, and our argument here is that he will not have had any direct knowledge of the working relationship of myself and site based management.

The accountant picked up on the wording of the previous responses when informing us of the interview with the end clients, things such as the end client CONFIRMED and AGREED etc, and he hit out heavily that this wording seemed to demonstrate that the Revenue had entered with some pre-conceived agenda, which we all know they have, but they have taken exception to this. But I believe this is one of the main reasons they wish to interview them again.

So I'm hoping you can give me your thoughts on all this, just so I'm confident with the direction my accountant decides to take. I would personally like to find some way to tell the Revenue they cannot go back and re-interview clients because they made a mess of it first time round, we are soon going to be 2 years down the line with no decision as yet, and there must come some point where we can call a halt, if not they could continually re-interview end clients until they finally get a response they are looking for, doesn't seem right to me.

Thanks in advance

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AlexA