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The First-tier Tribunal made errors of law in deciding that IR35 did not apply

By Mark McLaughlin, July 2024

The First-tier Tribunal erred in failing properly to construct a hypothetical contract and erred in its application of the mutuality of obligation test to the hypothetical contract for IR35 purposes, resulting in the original decision being set aside and the case being remitted to First-tier Tribunal. 

The appellant company (RALC) was the personal service company of its sole director and shareholder (RA). RALC provided the services of RA for fixed periods under three sets of contractual arrangements. In each case, there were four parties to the chain of contracts: RA, RALC, an agency, and the ‘end client’. The contractual arrangements involved: an agreement between RALC and the agency (the lower-level contract (LLC)); and a further agreement between the agency and the end client (the upper-level contract (ULC)). 

A dispute arose between the appellant and HM Revenue and Customs (HMRC) about the application of the intermediaries

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