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An IT contractor set on challenging the IR35 reform has fleshed out plans for apotential legal battle against HMRC for ‘preventing LTD company contractors from fulfilling their business directorship duties’, as reported by Computer Weekly.

The highly controversial measure prompted mixed emotions from contractors as illustrated by the CW jobs survey, but on the other hand, it was welcomed by a handful of industry professionals.

Mike Gibson, Managing Director of Ethical Consulting, set-up a Just Giving page in a bid to raise £10.5k to challenge the IR35 reform, which soon surpassed the target.

Mr Gibson said that when IR35 status is wrongly classified as under IR35, HMRC could be accused of preventing limited company contractors from fulfilling directorship duties, as set out in the Articles of Association.

Gibson told Computer Weekly, “The Articles of Association describe how I’ll run the business and describe what it will do, and IR35 frustrates me from doing that because it tells me I’m not allowed to be a company director, I’ve got to be an employee.”

“The question is; are [HMRC] frustrating my ability to be a director of a company that is legally constituted under English law through their implementation of IR35?”

Mike Gibson, and Andrew Merritt-Morling, an Entrepreneur, banded together to enlist Michael Paulin, tax barrister, who will undertake the analysis work to find grounds to battle HMRC, either through the legal route, or an alternative option.

IR35 legislation, also known as the off-payroll rules, came into force in April 2017.

The measure lays out that the IR35 status of public sector contractors will be determined by the public-sector body, not the contractor. If the contractor is deemed be inside IR35, they will be taxed at source liked an employee would, but without the employment rights.

IPSE, the Self-Employed & Freelancer Association, urged in their General Election 2017 manifesto, A Contract with the Self-Employed, that the IR35 reform should not be implemented to the private sector.

It has also been reported that the IR35 change has contributed to the public-sector IT decline, but the Government have backed their decision by stating that the changes are intended to “improve fairness in the tax system by ensuring that individuals are not able to sidestep employment taxes orNICsby working through aPSC.”

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