High Court orders Larkstar IR35 case to be re-heard
High Court orders Larkstar IR35 case to be re-heard

PCG, which represents the UK’s freelancers, has today announced that the High Court has ordered the Larkstar IR35 case to be re-heard by the General Commissioners; the case is being backed by PCG.

“This case shows how important it is to have expert advice from the earliest stage,” commented PCG’s managing director John Brazier. “Larkstar’s owner Alan Brill did very well to win his case at the General Commissioners, but he now faces the prospect of having to go through it all again – only this time he will have the support of PCG’s expert advisers.”

The case of Larkstar Data Ltd was originally heard at the General Commissioners, where Larkstar’s owner Alan Brill successfully represented himself – despite being a PCG member and eligible to claim on the Professional Expenses Insurance that comes with PCG membership. PCG funded his case at the High Court when HMRC appealed; now that it is going back to the Commissioners, Mr Brill is once again covered by PCG’s insurance.

Sir Donald Rattee decided that the case should be re-heard on the grounds that the General Commissioners misdirected themselves in law. Specifically, he finds that they failed to consider authorities that the Revenue referred them to, and so did not take all arguments into account. Sir Donald upheld only one of the Revenue’s four grounds for appeal, but this was enough to ensure that the case had to be re-heard.

“This case illustrates why PCG’s advisers have historically always taken cases to the Special Commissioners rather than the Generals,” added Mr Brazier. ”The Generals are a lay tribunal, which increases the chances of this kind of error compared to hearings before the Specials, who are professionally qualified. However, this system is set to be replaced by a new set of wholly professional tax tribunals on April 1st – it is not yet clear whether the re-hearing will be under the old or new system. Either way, it certainly seems fair to say that all is not lost in this case by any means.”

PCG membership comes with Professional Expenses Insurance (standard) or PAYE Audit Cover (PCGPlus); members also have access to an extensive Guide to IR35, which has been updated to cover the result of the Dragonfly case, IR35-safe contract templates and access to tax and legal helplines. A survey by PCG in 2007 showed that freelancers without access to this package of help and guidance are more than twice as likely to pay out under IR35 than PCG members.

No formal written judgment was published by the High Court, but a transcript of Sir Donald Rattee’s remarks is available from https://www.pcg.org.uk/policy/IR35. The judgment was handed down on 24 November 2008; PCG is able to announce the outcome now that the transcript is available and arrangements have been made for PCG’s support of the case’s re-hearing.

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