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Case Law Update - Dragonfly Consulting Ltd
The case of Dragonfly has been described as another nail in the coffin of contractors, bringing doom and gloom to the freelance contractor; however Accountax begs to differ. Dragonfly was a disappointing result; nonetheless in our opinion the Judgement brings nothing new to the table in respect of the law on IR35. Dragonfly merely reiterates that substitution must be unfettered and that the terms of the ‘upper’ agency to end-client contract must reflect the ‘lower’ agency to Limited Company contract. This has long since been established from previous IR35 decisions and the law has not changed. In this case the ‘upper contract’ contained no provisions on substitution; further the substitution clause in the ‘lower contract’ was fettered in the respect that the contractor first required the prior written consent of the Agency. Mr Justice Henderson provided no guidance on the correct approach to take when assessing control; he was unwilling to interfere with the findings of fact and came to the decision that the weight and significance to be attached to the facts was a matter for the Special Commissioner. Henderson J stated “in my view it was open to him to conclude the nature and degree of the control by the AA under the hypothetical contract was on balance a pointer towards employment”. Mutuality of Obligations was not a ground of appeal and as such the High Court decision adds nothing to the law on this area. Henderson J pointed out that the intention of the parties cannot prevail over the true legal effect of the agreement between the parties. His Honour did however recognise that in a borderline case a statement of the parties’ intention may be taken into account and may tip the balance one way or another, but in the majority of cases, such statements will be of little use. |
