Qdos IR35 wins show client confirmations work

For freelancers who might have been somewhat depressed by Bill Hood's Usetech Limited result at the Special Commissioners it might help to know that freelancers under challenge by the Revenue are still winning their cases on a regular basis.

Qdos Consulting, who have handled more successful cases than most, have won another 15 cases in the last month or so and their record of cases closed now stands at almost 350 wins to one loss with total tax and NIC saved of around £11m. Sarah Bauer and Kate Cottrell of Bauer and Cottrell have also recently secured a stunning result for a client, which I will write about in a separate article.

Nasty turn

One of Qdos's recent victories was a case which started about two and a half years ago when the freelancer was first notified of an impending employer's compliance review. That visit was delayed when the Revenue officer was ill but eventually he met with the Revenue two years ago.

As the freelancer described it he "laid out all the paperwork for the previous 12 years of business in front of the two polite and friendly tax officers who arrived by appointment at my door."

The compliance review seemed to go well – to such an extent that the officers told him he had overpaid tax and explained how he should recover it. The freelancer reported that: "As the officers left they assured me, without being prompted, that they consider the company to be a genuine business."

However, this story took a nasty turn when, two months later, a letter arrived from the Revenue questioning whether the freelancer's contracts were caught by the intermediaries legislation. At this stage the freelancer took advantage of his tax investigation insurance and called Qdos, who put one of their senior tax consultants, Carl Whittaker, onto the case. He advised the freelancer to obtain a client confirmation of arrangements ('COA') to support his case.

Confirmation of arrangements

This process was delayed as the freelancer, having been without a contract for a while, was now just in the process of securing a new contract with the former client whose contracts were the subject of the Revenue's IR35 challenge. As the freelancer explained:

"I was about to get a contract with the company which was to sign the COAs from previous contracts. So I stalled. And I stalled. Until I got the contract. A timely end to the drought for me. After a month in the new contract, I took the COAs to the company's HR people. But company HR policy was to not sign COAs."

As the investigation proceeded the freelancer received several questionnaires from the Revenue while, behind the scenes, Carl Whittaker persuaded the client to provide a signed COA. Not only did they provide the COA but they also renewed the freelancer's contract.

Low-key approach

Part of the secret of Qdos's success is that they adopt a low-key approach to wear the Revenue down. Each Revenue query is dealt with patiently and they avoid confrontation unless it becomes unavoidable. The success of this approach can be seen in their results.

All Qdos's 350 or so wins have been achieved without the need to risk an appearance before the Commissioners.

In this case the freelancer heard just after the Budget that the Revenue were conceding the IR35 claim.

This was the second two-year long case that reached a satisfactory conclusion for Qdos and their client in the last couple of weeks. However, not all cases take as long as two years. In a third Qdos victory in March the case had only taken six months. As Carl Whittaker of Qdos confirmed "we do settle cases quickly and it is only intransigent Inspectors that cause delay."

Another key in Qdos's success is the use of client confirmation of arrangement letters. In yet another case settled in March Qdos used a COA letter to bring a 12 month dispute to a successful conclusion. In this case the happy freelancer, Neil Brookes, confirmed to Qdos that:

"I believe that the key strategy of getting in first by having my client confirm my modus operandi, and supplying this to HMIT at an early stage was critical in our success. Although it has been 12 months of uncertainty, mainly brought about by HMIT seeming to have lost sight of our case, having an expert with your track record dealing with the matter left me from day-one with very little to worry about - it was simply a case of when will we be given the all-clear, and not a question of if "

In the fight against IR35 the occasional high profile case at the Commissioners can bring the freelancer community good news or bad. But for individual freelancers it's their own result that really counts and Qdos seems to have the knack of delivering good news consistently. As Gary Player once said of his golfing success "it seems the more I practice the luckier I get".