Real Risk of IR35 HMRC Investigation

[john@UKCA]

A total of 193 IR35 tax investigations were opened by HMRC in the first half of this tax year which compares to the paltry 59 carried out in the whole of 2011/12 according to data obtained by the tax and accounting group Bloomsbury Professional.

So far the 193 new investigations have failed to find any compliance failures.

I assume the above was obtained under the freedom of information act?

Having stated the above what do perceive as your real risk of being selected for a IR35 review by HMRC if you contract via your own limited company.

[bobspud]

A total of 193 IR35 tax investigations were opened by HMRC in the first half of this tax year which compares to the paltry 59 carried out in the whole of 2011/12 according to data obtained by the tax and accounting group Bloomsbury Professional.

So far the 193 new investigations have failed to find any compliance failures.

I assume the above was obtained under the freedom of information act?

Having stated the above what do perceive as your real risk of being selected for a IR35 review by HMRC if you contract via your own limited company.

Low but bloody expensive for us to defend if they do ask...

[cojak]

Thank goodness for PCG+ then.

[northernladuk]

The real question here is how time, effort and cash does it cost to avoid being one of those? The answer to that is very little so I don't think it is wise to use the fact there is a low risk of being investigated as a reason not to carry out a low cost, low time effort to mitigate it IMO.

[kevpuk]

What NLUK said ^^

I guess we can never be sure, but the mitigation steps are a no-brainer

[Pondlife]

Surely, there are two types of contractor;

The ones that know about IR35, do a bit of reading, then get their contracts reviewed and put some level of insurance in place. Total cost for the year can be earnt by the time your 1st coffee of the day has kicked in on a Monday morning.

Then the ones who either don't know and/or don't care. Total cost £0 for now...

I guess both sleep soundly but the latter are in for a nasty shock when that brown envelope drops onto their mat.

[ASB]

Surely, there are two types of contractor;

The ones that know about IR35, do a bit of reading, then get their contracts reviewed and put some level of insurance in place. Total cost for the year can be earnt by the time your 1st coffee of the day has kicked in on a Monday morning.

Then the ones who either don't know and/or don't care. Total cost £0 for now...

I guess both sleep soundly but the latter are in for a nasty shock when that brown envelope drops onto their mat.

3. Those that take an "easylife" route ans pay themselves as PAYE just in case

4. Those that know they are "caught", and don't reallt care and act accordingly

5. Those that use Umbrellas etc to be on the safe side

I suspect it has been quite effective at moving a number of people into arrangements that HMRC like. A few investigations whether successful or otherwise has the desired effect of encouragement.

[GazCol]

Surely, there are two types of contractor;

The ones that know about IR35, do a bit of reading, then get their contracts reviewed and put some level of insurance in place. Total cost for the year can be earnt by the time your 1st coffee of the day has kicked in on a Monday morning.

Then the ones who either don't know and/or don't care. Total cost £0 for now...

I guess both sleep soundly but the latter are in for a nasty shock when that brown envelope drops onto their mat.

As this is a revenue exercise for HMRC I wouldn't be surprised if they have a filtering mechanism in place whereby group 1, i.e. those that know and are prepared for IR35 (PCG membership, qdos insurance, contract reviews, etc), are of even less risk of investigation as HMRC knows it’s chances of success are far lower when compared to picking on group 2; which is what I guess to be, the larger group, i.e. those that are blissfully unaware of whether or not they’re operating inside or outside the legislation (or perhaps have their head in the sand about it).

I’m obviously not saying prepare for IR35 and you’re totally mitigating the risk of investigation but I wouldn’t be surprised if HMRC picks on what it sees as easier targets; before anybody misconstrues my post.

[DonkeyRhubarb]

I suspect it has been quite effective at moving a number of people into arrangements that HMRC like.

And ones they don't like eg. the tens of thousands who have used ebt/loan type schemes.

[eek]

And ones they don't like eg. the tens of thousands who have used ebt/loan type schemes.

Nah they also like those as well. Because they know how to deal with them now and can extract more from those involved by eventually bankrupting them.

The issue with the EBT is the smooth salesmen and carefully chosen words that they use.