The latest IR35 tribunal case win for contractor Susan Winchester has been penned as a ‘game-changer’ for the industry. After a year-long battle, Winchester successfully won over £4000 in compensation for holiday pay from HMRC, after being placed as inside-IR35.

 

Background

In September 2016, Winchester’s company, SJW Marketing Solutions Ltd, was contracted by HMRC to supply the department with marketing services. However, later her contract was assessed as inside-IR35 by the CEST tool, so Winchester was placed on an agency payroll.

 

Winchester’s dispute and win

As a result of this decision, Winchester launched a claim to a Central London employment tribunal against HMRC and four other firms in the contractual chain.

The claim was for £4,200 in unpaid holiday pay under the agency workers regulations. She argued that being on an agency payroll effectively made her an agency worker and she was therefore entitled to the same holiday rights and a clear, transparent amount of holiday pay as employees of HMRC.

On the morning of the tribunal, all parties involved agreed to settle the case for the full amount Winchester requested.

After the tribunal, Winchester made a statement concerning the proceedings, asserting that this “was about what’s right and wrong and not being bullied into a position”. She added:

“I just couldn’t understand why somebody could make some arbitrary decision about my tax and employment status on a brief, over-simplified questionnaire that I had no input in, and seemingly no right to challenge.”

 

Industry reaction

The FCSA has hailed this holiday pay settlement, as a ‘landmark’ decision because it highlights employment rights as applicable to contractors who fall inside-IR35. They stated: “This case is just the tip of the iceberg [and] we’re likely to see more fallout as contractors stand up for their rights.”

It sends a message that if contractors are taxed like workers, then they could be entitled to employee-style rights too. Larsen Howie agrees that the case could prove “hugely significant” for other contractors “pushed into similar arrangements”.

 

Working in the public sector, caught inside of IR35 or just not interested in running a limited company? Cloud9 Umbrella can support you with our straightforward, honest and compliant payroll service. The team at Cloud9 works hard to provide total transparency for contractors and ensure full employment rights for workers.

K&B Accountancy Group offer a package designed to support PSCs with IR35. The Essential IR35 package, specifically includes IR35 advice, review and protection from our partners and experts Bauer & Cottrell. Our aim is to help ease your mind and simplify the administrative side of contracting.