IR35 Chronicles XIX

This is part nineteen of our serialisation of an IR35 enquiry. To access the previous parts please visit our IR35 Chronicles Index.

A month after having sent the 'Statement of Working Practices' document to HMRC, Dee Fender received a response from an unimpressed Mr Turpin who seemed to be intent on discrediting and devaluing the evidence that the IR35 expert had thought might make Turpin at least stop in his tracks and make him think again. This only turned out to be wishful thinking on her part.

Turpin refused to accept the document as evidence of any substance for two reasons. Firstly, he stated that Graham Hargreaves had no authority to act as a spokesperson for BIG IT and, secondly, even if he did have such authority Turpin had made it clear in past correspondence that such evidence was superficial.

The document only scratched the surface and was not detailed enough to satisfy or persuade the Status Inspector that his understanding of the facts of the case thus far should be disturbed. As no further information was forthcoming to alter his opinion he was now raising determinations under Regulation 80 of the Income Tax (Pay as You Earn) Regulations 2003 and Section 8 of the Social Security Contributions (Transfer of Functions) Act 1999 on BSOD Ltd so as to collect the income tax and NICs that would arise following the application of the IR35 legislation. The combined amounts charged by the assessments were as follows;

2005/06;  £2,520
2006/07;  £11,872
2007/08;  £11,789
2008/09;  £16,977
2009/10;  £1,929

In addition to these liabilities there was interest and a potential penalty and HMRC invited the company to make a payment on account to stop further interest accumulating.

A furious Mrs Fender telephoned the obstinate Turpin but, despite her premeditated promises to herself and attempts to remain calm and collected, ended up shouting at the Status Inspector in exasperation. Despite Fender's sound reasoning Turpin was having none of it and simply regurgitated the contents of his last letter as his justification for not entertaining the tax professional’s rationale.

After ten minutes of banging her head against the proverbial brick wall, Dee Fender changed tack and warned Turpin that if he continued acting unreasonably she would resort to lodging a complaint with his manager. Even this did not provoke the desired effect as Turpin was unmoved by such a threat and, with a confidence bordering on arrogance, appeared to be inviting her to do so.

As soon as the telephone conversation had drawn to a conclusion Dee Fender contacted Neil Down to brief him on the recent developments. She conveyed to her client the sheer frustration and disgust she felt towards Turpin's contemptuous behaviour and vowed to take the matter up with Mr Turpin's manager, Vernon Pool.

Whilst Neil appreciated the personal concern and gritted determination his advisor was expressing his emotions were once again undergoing a roller coaster ride. Just when he thought there was some glimmer of hope, Turpin was pulling the rug from under him. With a tone of resignation in his voice he asked Mrs Fender if it was worthwhile approaching Turpin with a view to reaching a compromise settlement with HMRC.

She thought it unlikely that Turpin would be agreeable to such a suggestion and urged her client to remain resolute as she still believed all was not lost. With an air of confidence and authority that resurrected Neil's hopes, Dee Fender declared that Turpin could not and would not be allowed to ignore the evidence they had obtained from Graham Hargreaves.

She told Neil to ask Graham if he would be willing to either attend a meeting with Turpin, accompanied by herself and Neil, or alternatively to answer Revenue questions by way of correspondence, as it was clearly going to be necessary for Mr Hargreaves to provide more flesh to the bones of the 'Statement of Working Practices'.

Dee Fender lodged an appeal against the tax and NIC assessments within the permitted thirty days and, at the same time, sent a separate letter of complaint to Vernon Pool demanding that either his colleague be instructed act in a spirit of co-operation and fairness or, if Turpin was incapable of this, that he should be withdrawn from the enquiry and replaced by an Inspector who was more professionally competent!

Next week:  Will Pool stand by his man?

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