IR35 Investigations Meeting HMRC Expectations

IR35 Investigations are in full swing and possible Business Entity Test changes are on the way. 2013 is on course to be a busy year for contractors.

Following the recent IR35 forum meeting that took place earlier this year on January 22nd, HM Revenue & Customs have stated that they are making “good progress” so far regarding their push on IR35 and their fight against ‘disguised employees’. The tax office’s recent implementation of three teams of IR35 experts is said to be on course to meeting all expectations concerning IR35 investigations put forth by HMRC, and the teams are looking to increase the number of enquiries altogether. It has been said however that HMRC’s treatment towards contractors has made recipients “very unhappy”, apparently due to its IR35 letters and continuing involvement.

Despite fears that the number of impending investigations would jump above and beyond the prospected volume, HMRC said in October that the teams are on course to hit the target of 230 or so cases that were vowed to the Public Accounts Committee.

2013 thus far has been somewhat busy for limited company contractors, with many sectors seeing a rise in temporary contracts, and HMRC involvement with professional tax undeniably on the rise.

Since HMRC have issued their pledge, the approach to IR35 has been changing; some of the IR35 officials pursuing contractors have demanded copies of ‘upper contracts,’ giving the impression that they will make a beeline to the end-users for information. This is being said to be “Causing anxiety” throughout the profession, because “such contact had in the past led to loss of contracts.”

“HMRC said that they will always in the first instance try to get information from the customer under enquiry. Nevertheless, they reserved the right to approach third parties if they considered it was necessary.”

As 2013 ploughs on, we are set to see much change and alteration to IR35 rules and HMRC legislation, the tax office stating that the overall IR35 guidance is currently under review. This will potentially have large effects on Business Entity Tests and the Employment Status Manual, HMRC finally realising the inaccessible and frankly difficult process that is involved with most IR35 related guidance.

The next IR35 Forum meeting is scheduled for April 29.

By:Sam Greenwell

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