Freelancer recovers deemed tax after IR35 victory

I recently reported on the case of Victor and his company Victory Ltd, who won his IR35 case at the General Commissioners. See here for details. The victory is now complete, as he has recovered the tax and NIC on the deemed salary, which had been paid over for the tax years 2000/1 and 2001/2 when he was wrongly advised that his contract was caught by IR35.

Now that the money has been successfully recovered Victor is happy to step out from the shadows and reveal his true identity.

This freelancer, who tackled the Revenue himself when he concluded that he had been wrongly advised by his accountant, is Adrian Wanless and his company is Mawbray Computer Consultants Ltd.

Adrian is delighted to report that he has now recovered a net refund of around £13K being the deemed tax and NIC paid of around £20K less the additional taxes due on the increased company profit. Adrian confirms that the refund could have been even bigger but in one tax year he had increased his salary to provide for a larger pension contribution.

Commenting on his success Adrian said that the refund was "worth all the effort and stress" that the case had been and was "a rather nice Easter present".

At the risk of being sacrilegious at this time of year this appears to be a fitting reward for a freelancer who had the courage of his convictions.

It is also worth noting that, where freelancers decide to take advantage of the various services being offered in the marketplace for recovering deemed tax and NIC that has been paid in error, it can make quite a difference whether the adviser's fees are based on the gross IR35 tax and NIC recovered or on the net recovery after taking into account any additional corporation taxes that might be due.

Qdos, whose Out of the Box service for recovering tax and NIC has been mentioned here on UKTECH, has confirmed that their fees are based on the net recovery not the gross.

However, if you are brave enough you can do it on your own like Adrian!

Kevin Miller, MA FCA

Kevin Miller Consulting Limited