Contractors caught by IR35 face enquiry survey

Contractors who have faced an IR35 investigation since last April will be quizzed about their ordeal, as part of a wider plan to survey all taxpayers at the end of enquiries under the rule.

Both feedback opportunities are designed to inform the IR35 review, being run by the IR35 Forum and the taxman, into the IR35 compliance process that was unveiled last May.

Questionnaires will therefore be sent to those contractors who have experienced the new process which, with the BETs and IR35 Scenarios, all contractors can now feedback on.

A similar batch of questionnaires will be issued to all taxpayers, including their advisers, at an IR35 enquiry’s close, assuming HM Revenue & Customs gets approval for such a survey.

“HMRC advised that this has not been allowed in the past”, the latest IR35 Forum minutes state. “But... [it will now] seek agreement to survey customers at the end of IR35 enquiries.” 

Of the 256 enquiries last year, HMRC told the forum that tax and NICs brought in £985,901 of the £1.1m yield, which is also made up of £97,500 in interest and almost £35,000 in fines.

Although an average per case yield is “not calculable,” the Revenue added that it would soon release further data on IR35, partly because it “should be getting statistics out more quickly”.

It also believes that its IR35 figures should be released as part of the review into the rule, the findings from which ContractorUK understands will be publicised in a report this summer.

In fact, at November’s IR35 Forum, minutes for which were recently posted below those for its latest meeting (in February), HMRC said its data should go out “sooner rather than later.”

As to why the department has taken six months to disclose the minutes of the November meeting, and four months to disclose minutes of the latest one, a Forum member told CUK:

“The delay [is] down to HMRC’s site moving to .gov.uk; the intervening Lords inquiry and all the new legislation that came out in April… that obviously involves forum members.”

The member added that although both meetings were taken up with the review of the IR35 processes and guidance, introduced in 2013, “some real improvements” are on the cards.

In particular, the Revenue has been told to consider relaxing the rules around its Contract Review service, so that it may give opinions on unsigned contracts, albeit with more caveats.

The tax authority is also planning to unveil a seven-part online guide to IR35, designed to make its guidance on the legislation clearer, more succinct and easier to navigate.

To be found on .gov.uk, the guide will be linked to HMRC manuals and will clearly show up in Google’s Web Search results to taxpayers who type ‘IR35’ into the search engine.

The guidance will also reflect what the Revenue described as the ‘top 20 user need stories’ -- the twenty most commonly cited reasons users access the department’s IR35 web pages.

But the transition of HMRC’s IR35 information from its current website – www.hmrc.gov.uk -- to the new, user-friendly format on .Gov appears to be behind schedule.

It was meant to go live no later than March but, at present, the guide is not available on .Gov, although the IR35 Forum pages, planned subsequently at “a later date,” are already viewable.

The IR35 Forum member reflected: “Similar to the [review of the] new IR35 processes and guidance, [.Gov. as the one-stop-shop for official help on IR35] is still a work in progress.”

As to the review, HMRC says that it wants to be “as inclusive as possible” in conducting it, but must consider the amount of capacity the department has to manage incoming feedback.

The minutes of the Forum’s November meeting add: “HMRC wants to make clear that this is an informal review only, but one that hopes to make clear recommendations for the future.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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