HMRC Targeting Public Sector

Recent reports suggest that HMRC are targeting the public sector and in particular the NHS, as 86 senior health officials operating through PSCs could be facing IR35 enquiries.

We have had queries from several concerned clients in the public sector particularly from the NHS. We advise that you act with caution and use IR35 best practice at all times.

All workers are required to provide evidence of their IR35 status within 20 working days of the issue or renewal of their contract. If they cannot do this, the contract could be terminated and their details may potentially be passed to HMRC.

A low risk score on HMRC’s Business Entity Test (BET), backed up with sufficient evidence will effectively end an enquiry and providing your working practices remain the same for the next three years, HMRC will leave you alone for this amount of time.

A medium or high risk score on the Business Entity Test does put you under a higher risk, however you can still be found to be outside of IR35.

IR35 case law that has been in place since its inception still applies, therefore it is essential that your working practices/relationship with the client and contracts are IR35 compliant. We are able to provide compliance tests for these.

We have our highly successful IR35 Public Sector Solution Pack for independent contractors working in the public sector. This includes a comprehensive review of your contract, your working practices and the Business Entity Test. We will inform you of how your working practices and contract wording can be amended to strengthen your IR35 position. We will also advise on actions you can take to reduce your score on the Business Entity Test to put you in the low risk category. From experience most PSCs fall in the medium risk category.

 For non public sector contractors, our IR35 Defence Pack has been designed to provide a comprehensive review of your IR35 status, including a review of your working practices, written contract and the BET. Concluding with a certificate confirming our opinion of your IR35 compliance.

By:Sam Greenwell

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