IR35: An insight into the guidance

IR35 has been an "abject failure" at reaping tax for the Treasury since its inception more than 10 years ago, according to Qdos Consulting. 

Given the renewed interest in IR35 however, the tax consultants have provided a brief insight into the guidance. 

Included is a view into HMRC's risk-based approach to selecting contractors for compliance reviews. 

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  • New approach to enquiries 
  • Business entity tests (BETs)
  • Improved IR35 helpline
  • Public sector appointees
  • Controlling persons proposal

Continued...

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Comments

But it still won't raise any more revenue ...

vstrad | | Permalink

... unless contractors take fright and just give in.

And it stilldoesnt' remove the uncertainty either...

mfwiniberg | | Permalink

... because the tests still don't addresss the definition of 'service' companies, or of contractors like myself with multiple clients, and yet with no formal contracts.

For example, given that I provide, specify, monitor and supply (or order as appropriate) all the IT and connectivity for one particular client, I could reasonably be considered to be a controlling person, yet I have no written contract, no agreed hours of work, provide my own equipment (even on site), sell equipment at a profit through my 'service' company to this client as well as others, control my own hours of work and also subsititute other contractors when I am not available - whom I pay on an on-call basis. I have done this now for five years for this particular client, whilst still doing business with other clients. Some of that business is undertaken by the other director/employee of the company, so I cannot see how it can possibly be a 'service' company in the HMRC sense, but nevertheless the entire company mainly provides services, rather than goods.

So, where do I fit on the risk scale 8) ?

What's even more amazing is that it appears that some senior civil servants (including BBC employees) have effectively been operating arrangements that clearly fall foul of IR35 for some time, with full knowledge of HMRC it would seem, and yet nothing at all has been said or done - until the sh*t hit the fan recently. As always, its so much easier (both legally and politically) to go after the small-fry than the people actually abusing the system, so - once again - it's the small entrepreneur who suffers whilst the mandarins do as they please.

HMRC could raise more money by pursuing just one of the major tax 'avoiders' (Vodafone, Starbucks, Amazon etc etc) than they have in 10 years of pointless, mostly failed, investigations. Perhaps the recent publicity will concentrate minds a bit, but I'm not holding my breath...

Mike