IR35 and HMRC'S focus on end client

The IR35 minutes have recently been published, giving the public an insight into the discussions and negotiations of the IR35 forum, highlighting the most important and consequential points made.

Much was deliberated in this latest meeting, where specialists from the field including Rowena Fletch (Chair) and Sarah Radford (HMRC Policy) came together with a body of relevant professionals to consider the future of IR35, and review any updates/changes that had been made.

New Compliance Approach

One of the most important topics that was addressed in the forum meeting was outlined in point 34 of the published minutes. The point stated that external forum members asked: “In what cases would HMRC need to approach an end user client for information?

‘Approaching the end client’ is the technique used by the Revenue, where a contractor’s end client (their place of work for example) will be targeted with questioning in an attempt to ‘smoke out’ disguised employees.

To the question put forth at the forum meeting, HMRC explained they will go to the end client in most high risk cases, and pointed out that only in very exceptional circumstances will HMRC not approach the end client in order to check facts. HMRC added that they “would not be doing their job properly” if they just accepted information at face value and didn’t test what they were being told.

The much discussed ‘crackdown’ on tax avoidance that HMRC have strived to sustain is building throughout the contracting sector. IR35 has been gaining momentum for some time now, the Revenue’s fourth dedicated IR35 team having been introduced earlier this year. IR35 is a constant concern for limited company professionals, and with HMRC’s plans to contact end clients in most cases reiterates an ongoing thrust to combat contractor tax avoidance.