IR35 Overview Throughout the Year

Throughout 2012, contracting saw numerous changes and alterations made to its laws and legislations, a rise in contracts themselves, and professionals bore the brunt of an ever tightening grip from HMRC. Now that it is over however, we can look back at a year amplified with activity, and take a look at what is in store for 2013.

Based on information gathered by the Association of Professional Staffing Companies (APSCo), it is visible that a clear rise in contracts existed in 2012, businesses increasing demand for limited company contractors. Employers have continued to place greater reliance on temporary staff to carry out professional and management level jobs, and as a result of this, businesses have turned to contractors to meet their professional level staffing requirements rather than increase their permanent headcount.

This pattern increased throughout the year, and alongside this, HMRC began growing their efforts to combat IR35, their number of official cases rising from January to December. HMRC opened 193 IR35 investigations between the dates of 1st April 2012 to the 9th of November, showing a hefty step up concerning IR35 involvement compared to recent years. Whether a direct result of an increase in contracts, or merely a product of contracting activity, HMRC’s response to contracting last year was a wakeup call to many.

IR35 Insurance

With an influx of those in the contracting profession, and of course HMRC’s IR35 push, sufficient protection proved a greater necessity than ever, contractors shielding themselves with IR35 insurance as a safety net. As a form of protection, IR35 insurance is very important, as HMRC can target contractors who potentially fall under the legislative boundaries at any time. If the tax office’s stamped letter were to fall onto the carpet of any contractor, the knowledge that proper insurance had been implemented would provide some much needed peace of mind.

Throughout the year, IR35 made its impact on most UK contractors, of course not all directly, but there was much commotion and hubbub on the forums and news sites to reach the ears of even the most inactive of limited company workers.

From statistics and trends given at the latter part of 2012, it looks as if 2013 will no doubt follow suit, with HMRC stating an increase in IR35 activity, and their new specialist team still getting under way.

By:Steven Bailey

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