CEST ASSESSMENT REJECTED BY JUDGE AS CONTRACTOR RECOUPS UNLAWFULLY DEDUCTED TAX
A contractor has successfully used an employment tribunal to prove their outside IR35 status and reclaim thousands in overpaid tax, in a case during which the tribunal Judge ruled Elbourn was self-employed. This decision contradicted the result previously given using HMRC’s Check Employment Status for Tax (CEST) tool, which had wrongly concluded that IR35 applied to his engagement.
Mr Elbourn appealed to the tax tribunal for unlawful deduction of wages, during an engagement with agency Qualserve Consulting Ltd and end-client the Met Office, on the basis that employers National Insurance contributions should not have been deducted from his rate.
However, Mr Elbourn lost his appeal on the basis that he was found to be neither an employee, nor a worker, but self-employed – meaning IR35 could not have applied to the engagement.
However, in securing legal proof of his employment status, Elbourn managed to prove that an estimated £9,500 was wrongly deducted from his income by the client and agency, who treated him as ‘employed for tax purposes’ under the Off-Payroll rules. As a result, the respondents are compelled to repay the sum deducted.
Qualserve had made the decision to tax Elbourn accordingly with a CEST assessment, which had found him within scope of the rules. An evaluation which was wholly rejected by Judge O’Rourke, who concluded: “He [Elbourn] was given a project and, apart from a weekly meeting to check on progress, he was his own master.”
“This case marks a hammer blow for HMRC,” comments ContractorCalculator CEO, Dave Chaplin. “CEST’s accuracy has once again been called into question, in a case where the contractor’s self-employed status was never in doubt.
“Moreover, the case has presented thousands more contractors, who have been overtaxed due to Off-Payroll, with a straightforward means of recouping what is rightfully theirs.
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