IR35 Forum: main points for contractors
The main points of note for contractors from the latest IR35 Forum of April 29th are the following, writes Kate Cottrell, the only IR35 specialist who attended the meeting and the co-founder of employment status advisory Bauer & Cottrell.
New HMRC IR35 specialist team for Bradford = 4 teams now
HM Revenue & Customs has increased the number of IR35 specialist teams to four, so it would be fair to say they are needed to deal with the increase in investigations. The message is, as always, this is not the time to ignore IR35 whether you are new to contracting or are an old hand.
Impossible for the public sector to achieve consistency
If you are providing services to the public sector and have been asked to provide assurance on your tax/NIC IR35 position, it seems that you must be prepared to take part in a different assurance process for each department you work for.
The Cabinet Office guidance issued to departments is simply guidance and is not a template for carrying out the assurance processes. As each department head has responsibility for their own office and would have to appear before Parliamentary Committees, it is up to them how they deal with this issue.
So it is OK for those departments that have decided that “inside IR35” is the default position unless you are low risk under the Business Entity Tests; OK for those that will only be satisfied with a copy of your “inside IR35” deemed payment calculation, and OK too for those that are quite happy to receive evidence of an independent IR35 contract review from a specialist provider. The message is that consistency is not achievable.
All change for the new approach to IR35?
The new administration of IR35 since May 2012 is still a pilot exercise and this is up for review over the summer. It is a case of watch this space as changes could be made.
Office-holders have new guidance
Further guidance in the form of FAQs has been published for contractors who are office-holders at client-organisations. See HMRC’s website.
HMRC Contract Review Service not working
The majority of IR35 Contract Reviews (79 out of 89) carried out by HMRC resulted in the department being unable to give an opinion. This is because contractors were either reluctant to give further information or to allow HMRC to go to the end-user/client. This is not altogether surprising and it is again a case of watch this space as this service is also up for review over the summer.
HMRC does give weight to evidence from IR35 contract review experts
The Revenue confirmed that they do give weight to an IR35 specialist opinion but could not regard it necessarily as definitive. This is encouraging for all those contractors who choose to use IR35 specialist providers for their contract reviews.
In summary, the last few months have seen a lot of action from the government and HMRC regarding tax and NIC avoidance, and IR35 is an avoidance measure. It is still very much part of the government’s anti-avoidance armoury and is being strengthened. Ignoring IR35 is not an option.