HMRC again failed to convince the Tribunal that IR35 applies in the recent decision of Marlen Ltd.
It was the contractor’s flexibility in terms of hours, holidays and absences that the Tribunal found to be
markedly different to employees and, when considered in light of all the elements within this important factor,
concluded the degree of control was not sufficient to constitute a contract of employment.
HMRC’s contentions that mutuality of obligations existed within each contract (having accepted there was no
ongoing mutuality) also bore no reflection of the facts. Crucially, and as in the case of MBF Design Services
Ltd, Mr Hughes, the contractor, as all contractors, had been sent home without pay when the computers were
down. In addition to early terminations by both parties during the course of the engagements, the evidence was
compelling that this was a case where no mutuality of obligations existed. In summarising all the factors, the
Tribunal did not find one single aspect which was consistent with a contract of employment.
Accountax, who defended Marlen Ltd, commented that “With such a string of defeats one asks whether HMRC
will change their approach to IR35 cases, since it is becoming increasingly apparent that the cases they are
choosing to pursue are clearly not within the ambit of IR35”.
Orange & Gold would suggest that a simple lesson comes from this case. In the event of a power failure on
client site, go home.