Fifth IR35 Forum folds under heavy workload

The timelines to ensure the improved administration of IR35 did look more certain than the details of those improvements at the last and fourth IR35 Forum meeting in November.

Fifth IR35 Forum meeting ‘cancelled’

But while the deadline for the new IR35 system remains intact (April 2012), the sheer amount of work involved has postponed the fifth IR35 Forum meeting from today (January 18th) until February.      

How IR35 will be administered

The work was thrown up by two sub-meetings of the forum, each hosted by HM Revenue & Customs on January 11th. The first meeting in the morning dealt with the operational side of IR35 and how cases will be administered from April 2012, writes Kate Cottrell, IR35 Forum member and founder of Bauer & Cottrell, seconded for the IR35 review by the Office of Tax Simplification. As it promised, HMRC has been working on identifying the population affected by IR35 and building on operational processes discussed in previous IR35 Forum meetings.

IR35 scenarios & the tiered test

The second meeting was billed as a technical sub-group. The Revenue gave their opinion on the IR35 scenarios and highlighted where there was agreement and disagreement on each case or where further information or detail is required. HMRC also gave their views on a possible business test (the tiered test) to identify those contractors at a low risk of being investigated for IR35. The tax authority then went on to propose a short test that it had designed.   

Much more work to do

There is much more work to be done by both HMRC and Forum members to ensure delivery of an improved IR35 administration by April 2012. It is to this end that the full Forum meeting, originally scheduled for this month, has been cancelled until February.

More positively, good progress has been made yet there is still some way to go with the risk-profiling aspect or ANY sort of business test.

IR35 hasn’t blinked since birth

As with most forum of this nature, the role of the external members is in a consultancy and advisory capacity – it is not an opportunity to change the rules, as the IR35 legislation has not changed. 

That said, April will see an IR35 administration process that HMRC are comfortable with and one that satisfies their responsibilities to administer and police IR35. Contractors will be better placed to understand their IR35-risk and if investigated should see a faster, streamlined process, overseen by HMRC experts on the legislation.   

Jan 18, 2012