Second round of the IR35 Forum minutes published by HMRC

The second meeting of the IR35 Forum, set up by the Government to provide advice on improvements in the administration of IR35, was held on 29th June. It was attended by HMRC – who yesterday published the minutes - and industry advisors, including IR35 expert Kate Cottrell of Bauer and Cottrell, who reports on the progress made during the meeting below:

What’s new?

BEST

The creation of a Business Educational Support Team is under consideration by HMRC.  This is all about help and education and HMRC has clearly taken on board the need to address IR35 from the perspective of end clients, employers and agencies (i.e. all the parties in the contractual chain) as well as from the individual’s perspective.

IR35 National Compliance Unit

This is another initiative under consideration by HMRC where “interventions” will be used for low level risk IR35 cases as opposed to full blown compliance reviews.  Essentially letters will be sent out to alert those affected and HMRC has already used this approach in a number of sectors e.g. Doctors and the current Plumbers initiative.

Any progress since the first meeting?

IR35 Helpline

Progress has been made on HMRC’s IR35 Helpline and it is possible to create an audit trail for anyone using the service.  This means that it will be possible, providing the individual consents, to prove that advice was sought from the Helpline.  HMRC reiterated again that the Helpline is a customer service and is not used for compliance activity. 

IR35 Guidance and work on the “gateway” test

Both these issues are considered by HMRC to be work in progress.

Wait for the details

Everyone is eagerly awaiting the detail on what constitutes a high, medium or low risk IR35 target but this is a complicated process which is made more difficult because HMRC are not able to share details of their risk profiling processes.  I remain confident that we will end up with much better IR35 guidance for all the parties to the contractual chain and there will be a definition of individuals who are very clearly not the target of the IR35 legislation.  For those potentially within the IR35 ambit the challenge remains and we will have to wait a little longer for the details.

Aug 02, 2011