This is part twenty-two and our final episode of the IR35 enquiry Chronicles. To access the previous parts please visit our IR35 Chronicles Index.
Not for the first time Mr Turpin caused Dee Fender's blood pressure to reach boiling point by notifying the IR35 expert that Graham Hargreaves' response to his 60 questions was not sufficient to dislodge his original opinion that BSOD Ltd's contracts to supply services to BIG IT were caught by IR35.
Whilst he accepted there were areas of Mr Hargreaves evidence that conflicted with that of the end client and cast a different complexion on some of the employment status tests, the documentation and information obtained from BIG IT took precedence and could not be overturned by that of a solitary ex-employee.
Turpin's letter meticulously set out his reasons for standing by his original decision and compared and contrasted this with Graham Hargreaves' explanations in an attempt to demonstrate the lack of impact the ex-Project Manager's information had on the case.
Dee Fender conveyed the disappointing news to her client but explained that this was not the end of the road and that she would be writing to Turpin to request that his decision be reviewed. She explained that this entailed HMRC appointing an officer, who had not previously been involved with the enquiry, carrying out a review with a fresh pair of eyes. Neil Down was not too impressed with this option and expressed his doubt that another Revenue official would act independently and impartially but nevertheless conceded that it was preferable than taking an appeal direct to the First Tier Tax Tribunal. Mrs Fender further endorsed his thinking by advising him that there was nothing to lose by going down the route of a review and would be relatively inexpensive compared to the fees that could be incurred by preparing for and taking an appeal to Tribunal. There would be a relatively small cost involved in drafting the case to put before the Review Officer but Neil had come too far now to back down and had over time become increasingly resilient and developed a loathing and resentment for the obstinate Status Inspector.
When Neil asked Dee Fender how long the review would take she informed him that HMRC would firstly write to her explaining their view of the matter under appeal within 30 days and the review would not take place until after this had happened. After this the review should be completed within 45 days. If the review was to take longer then HMRC would write to her to seek Neil's agreement to a longer period. Once the review was complete the Review Officer would write and tell them both of their decision. What if the decision went against Neil, what then? Mrs Fender told Neil that he would then have to decide if he wanted to take the appeal to the First Tier Tax Tribunal.
After the formality of HMRC writing to Dee Fender explaining their view yet again, a Mrs Elaine Grimley wrote to her introducing herself as the appointed Review Officer and explaining the process and formalities of the review itself. Mrs Grimley, who was also a Status Inspector, was based in a tax office outside of the area that Mr Turpin was located thereby confirming her independence.
Exactly 45 days after receiving the initial letter from Mrs Grimley, Dee Fender had to relay more bad news that the review had not been successful. Grimley explained that whilst there were areas that could weakly point towards self-employment these related to the minor employment status tests and were not strong enough to alter Turpin's original opinion. The papers would now be returned to Mr Turpin who would resume working the case.
After seeking Neil Down's agreement, Dee Fender wasted no time in lodging appeals with the First Tier Tax Tribunal and notified Mr Turpin of the same.
Several weeks later Mrs Fender received a telephone call from her excited client. Neil had heard through the grapevine that a contractor who had been providing services to BIG IT around the same time as Neil had won their IR35 enquiry but only after taking the matter to Tribunal. The IR35 expert was encouraged by this good news and charged Neil with carrying out some detective work, namely to discover the identity of the contractors company so that she could obtain a copy of the transcript of the judgement. The next day Neil e-mailed Dee Fender to inform her that the company in question was called Hardcastle Computing Ltd. The director, a Jed Hardcastle, had been an IT specialist engaged on projects separate to those that Neil had been working on during his time at BIG IT. He wasn't able to glean any additional information but his advisor told him that this was irrelevant as the judgement transcript would reveal the necessary details.
Once Mrs Fender had secured a copy of the transcript she wrote to Mr Turpin enclosing a copy of the same and setting out the similarities to her client’s case, of which there were many although not identical. Turpin again rejected the IR35 expert’s contentions pointing out that a First Tier Tax Tribunal judgement did not set any legal precedent, although it could be referred to in arguments. This prompted a series of exchanges over a number of months until, quite unexpectedly, Turpin finally conceded albeit ungraciously and without sufficient explanation. Turpin's correspondence explained that after further review it had been decided that it was not in HMRC's interests any longer to pursue the matter of IR35. Although he still believed that the facts of the case still pointed strongly towards the contract being one of service, there were now other factors that cast some doubt that this was conclusive.
A smug Dee Fender telephoned Neil Down who was elated with the unexpected bolt out of the blue. He was told not to be concerned that HMRC had given no explanation as to why they were dropping the case. After all, a win was a win but in her opinion she surmised that the similarities in the Hardcastle Computing Ltd ruling were too significant for the Revenue to ignore and that ultimately Turpin would have had been told to close the case abruptly.
The pair indulged themselves in mutual appreciation and congratulations. Neil expressed his indebtedness to his advisor and conveyed that without her he believed he would have given up the fight long ago. It only remained for Dee Fender to provide Mr Fiddler of Cheatem & Howe, Neils accountant, with a copy of HMRC's final confirmation. Her final piece of advice to Neil was that now he was acquainted with all the relevant arguments, to maintain an IR35 dossier for all future contracts in case BSOD Ltd should ever be the subject of another IR35 enquiry at some point in distant time. Neil assured her that he would not need reminding twice to do this.