Update No.3

Court reconvened at 2:04 with our QC Gerald Barling outlining information from the Frontier assessment. Specifically the information on Expenses incurred by a service company on average 16.6% against the allowance of 5% some adjustment of approx 6% was made for a comparison with a non IR35 company giving a net deficit of approx 5.5% for companies hit by IR35. The judge wanted details of the calculations and the breakdown from the assessment to obtain the 16.6% figure. Neil and Kevin appeared to make notes at this point and Gerald said the judge would be given the information.

Gerald moved on to the Regulatory Impact Assessment which stated the problems and the aim of IR35 to cut out the avoidance of National Insurance contributions by employers forcing employees into personal service companies. The balance had shifted with the second RIA to place the burden on the intermediary and not the employer. Numbers were given 66,000 businesses across different business categories and the intent that the legislation would make it uneconomical to run a service company for caught work. Gerald questioned for whom the employer or the intermediary. The higher rates charged by contractors was raised and the premium applied was attributed to the clients paying for avoidance or risk, (flexible resources) and that comparisons between employees and contractors were not reasonable.