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Busy roundabout | AccountingWEB | The numbers behind HMRC's IR35 team
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The numbers behind HMRC’s IR35 team

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HMRC has confirmed it has a 45-strong team targeting IR35 cases, with Rebecca Seeley Harris and Dave Chaplin both speaking to AccountingWEB about the wider implications of the figure and why it should perhaps be closer to 300.

23rd Apr 2024
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HMRC’s specialist compliance team, focused on IR35 investigations, had a headcount of 45 for the year ending 5 April 2024, according to law firm Pinsent Masons.

Information provided by the department shows that the team also has access to additional manpower and resources to tackle the lengthy and “at times controversial” arrangements under IR35 rules, where individuals are paid as self-employed contractors rather than as employees.

HMRC believes this has led to an underpayment in income tax and national insurance, with previous IR35 investigations including Gary Lineker, whose case was heard in a tax tribunal over a disputed £4.9m in tax.

Steven Porter, partner and head of tax disputes and investigations at Pinsent Masons, believes the scale of the dedicated team “shouldn’t come as a surprise”, noting that HMRC “has made clear its desire to maximise tax revenues in this area”.

“It has now built a lot of bandwidth that allows it to undertake more investigations,” Porter said.

Ramping up

Speaking to AccountingWEB, Rebecca Seeley Harris, employment status and IR35 expert at Re Legal Consulting, believes it “definitely shows that HMRC is ramping it up but, that is not forgetting that it’s not just IR35 or off-payroll working (OPW) that HMRC is looking at”.

“They will also be looking at other ways that businesses engage people working off-payroll in general,” she said. “However, the size of the team is probably indicative of the caseload that HMRC has in terms of their compliance activity.”

Seeley Harris noted that the problem is that such cases “take years from the initiation of the informal review on self-employed workers in general to going through the tribunal system”.

Lucrative but no quick win

“It’s not a quick win for HMRC but it’s probably going to be quite lucrative,” she added.

“For the taxpayer, whether it’s an individual under IR35 or whether it’s the business responding to the compliance check under OPW, it takes far too long. HMRC definitely needs to have a better system for establishing employment status themselves.

“In my experience, some of the HMRC caseworkers do not have enough experience or understanding of this very complex topic and there should be time limits on how long a case can be kept open without a Reg 80 determination.”

About 300 needed

Dave Chaplin, chief executive of IR35 Shield, told AccountingWEB: “Based on my experience dealing with HMRC under chapter 10 enquiries, it probably takes about one week for the very basic check, assuming the firm is conducting compliantly. So, one person might be able to do 40 per year. 45 people could do 1,800 per year.

“There are about 45,000 medium and large businesses.

“Therefore, it will take 25 years to get around to checking everyone, even for the most basic checks.

“It would be better for UK Plc for HMRC to check every relevant company at least every four years. So, they need about 300 people.”

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Replies (4)

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By JustAnotherUser
23rd Apr 2024 15:58

1 x President of IR35 Investigations
1 x VP of IR35 Investigations
5 x Sen Director of IR35 Investigations
5 x assistant to the Sen Director of IR35 Investigations
10 x Directors of IR35 Investigations
20 x Regional Directors of IR35 Investigations
2 x special assistants to the Regional Directors of IR35 Investigations
1 x customer services support for IR35, their name is Geoff
45,000 medium and large businesses who cannot get through to HMRC support, ever.

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By FactChecker
23rd Apr 2024 22:35

"HMRC believes this has led to an underpayment in income tax and national insurance, with previous IR35 investigations including Gary Lineker, whose case was heard in a tax tribunal over a disputed £4.9m in tax."

Was it deliberate, when illustrating HMRC's belief in the sanctity of their mission, to reference one of their more expensive failures?

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By AK Employment Tax Services
24th Apr 2024 12:27

I think this article is somewhat confusing. I assume the IR35 dedicated team are what are called technical specialists who manage issues relating to this area within HMRC. However, there will be personnel engaged in compliance teams who undertake compliance reviews in this area. The compliance teams will refer areas of complexity or dispute to the technical specialists

I would suggest on this basis the numbers are fairly significant against other areas of tax.

I accept that there are a lot of delays and misunderstanding within HMRC. From experience it is important the HMRC approach is carefully managed by technical teams. I am aware that in the early days of IR35 compliance teams would occasionally enter into reviews without involving the technical specialists. This led to some real issues over differences of approach

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By johnjenkins
24th Apr 2024 13:06

Keep squeezing the small business and and eventually there won't be any. Stagnation, stagnation, stagnation should be the Tory election cry. I can't wait for Reform to expand their manifesto.

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