After a 5 year fight, Novak Brajkovic has finally won his appeal against HMRC’s interpretation of his services contract.
Brajkovic is an IT contractor and between 1998 and 2002 he worked at Avecia as a self-employed programmer/analyst. His contract was organised by Lorien, a recruitment agency, but Brajkovic was unsure about his employment status as the contract stated he was under Avecia’s direct supervision.
To clarify matters, he contacted HMRC in January 2002 to ask whether he fell within the IR35 legislation. The revenue made enquiries and then demanded tax and National Insurance Contributions, plus penalties, from Brajkovic for the 9 months leading up to December 2002.
HMRC considered that Brajkovic was a full time employee rather than a contractor as he had worked at the same company for a while and enjoyed employee rights such as one months notice.
Avecia, on the other hand, said that Brajkovic had greater flexibility than permanent employees and was not entitled to take part in the company training scheme.
The judge presiding over the tribunal said that this was a borderline case and as such was notoriously difficult. Deciding whether this contract was in fact employment could not be achieved by traditional methods, such as mutual obligation, as they were not significant enough.
This case again shows that the IR35 legislation is too complex and in order to determine whether a contractor should be classed as employed or self-employed it needs to be simplified.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: HAPPY MAN by Niffty..
