HMRC status enquiry timeframes: don’t do a Sky Sports’ Barry Cowan and miss IR35 deadlines

Last week, it came to light that former tennis professional turned Sky Sports commentator, Barry Cowan, lost his IR35 case – but not for reasons you might expect, writes Nigel Nordone, head of tax at Qdos.

Not the first famous johnny-come-lately of late

In fact, Cowan didn’t lose his appeal fair and square. The Wimbledon commentator was refused permission to appeal at a First Tier Tax tribunal after his representatives in his IR35 case against HMRC missed the deadline to submit an application.

You might remember, this isn’t the first time this has happened. In December 2022, ex-rugby player Michael Lynagh suffered a similar fate after his IR35 defence team made the same catastrophic mistake. This slip-up could cost Lynagh in the region of £230,000 – the sum HMRC was chasing.

The courts won’t be sympathetic

While Cowan’s IR35 bill hasn’t been revealed, who’s to say his tax liability is any less? The judge who denied Cowan the opportunity to appeal spoke of a “serious and significant delay” for “no good reason”.

These two high-profile IR35 cases have highlighted the importance of having IR35 support that you can count on – a representative who fully understands the IR35 investigation process like the back of their hand and, crucially knows and adheres to HMRC’s strict timelines.

Key IR35 investigation timelines (and other deadlines if probed by HMRC)

However, as evidenced above, this isn’t a given.

To give contractors – and businesses for that matter – an idea of the typical timelines attached to an IR35 enquiry by HMRC, an IR35 investigation, and the tribunal and appeals process, we’ve outlined them below:

1. An IR35 enquiry is opened. Unless HMRC sets a specific deadline, the IR35 enquiry letter should be responded to within 30 days.

Be aware, this isn’t always the case. But if HMRC demands a sum for unpaid tax via a Regulation 80/Section 8 Assessment, you have 30 days to appeal from the date of the assessment being issued.

2. After the initial opening of an IR35 enquiry, HMRC will then invite a contractor to accept an ‘Internal Review of the Enquiry,’ explaining why the tax office believes the contract belongs inside IR35.

Again, you have 30 days to accept or reject this invitation from the date of the offer. If you reject the offer, an appeal must be notified to the tribunal within 30 days from the date of the offer.

3. Working on the basis that the offer of a review is accepted, HMRC must carry this out within 45 days – unless a specific timeline is agreed between the parties.

Once a review offer is accepted, an appeal can be notified to the tribunal after the date shown on a ‘Conclusion of Review’ letter or in 45 days, unless another timeframe has been agreed upon.

4. If contractors disagree with the review (which in layman’s terms is HMRC’s decision regarding IR35 status), they have 30 days to notify the tribunal.

Miss this deadline and fail to notify the tribunal – like Barry Cowan’s representatives did – and the appeal will be treated as settled.

5. But if you file your appeal within 30 days, the tribunal will write to you to advise if the appeal has been accepted, after having considered your argument.

Assuming it has been accepted, the tribunal’s letter will explain that HMRC has 60 days from the date of the letter to provide you and the tribunal with their view – also known as the ‘Statement of Case’.

6. This letter will also advise that you have 42 days from the date of receipt of HMRC’s ‘Statement of Case’ to send both the tribunal and HMRC a list of the documents that you will rely on at the tribunal hearing.

One further important date for your IR35 diary…

Following this, the tribunal will write to both parties, suggesting a date for the hearing to take place. Although I should add, this can take months and can depend on the schedule of the tribunal. Until the date of the tribunal, either you or HMRC can withdraw all or part of your case at any time, by writing to the tribunal or explaining during the hearing itself.

So, forget what you were told in school -- do clock-watch if probed under IR35

As you can see, defending an IR35 case can be a long, complicated process and has a number of deadlines which must be met – fail to meet these and you could easily find that a tribunal judge or even HMRC itself puts a stop to proceedings, regardless of whether you’re innocent and outside IR35.