IR35 digital tool is unlawful, taxman told

Lawyers for a recruitment body have written to the taxman over the potential unlawfulness of his IR35 digital tool.

Bindmans, on behalf of the Association of Recruitment Consultancies, say April’s IR35 reforms will either be “unlawful or lead to unlawfulness” if the online tool remains “flawed.”

Released last week, the tool is – and was always going to be – set up on a checklist basis, “a methodology repeatedly ruled by the courts as the wrong approach,” the association says.

But problematically, other than when answers have been fraudulently inputted, HM Revenue & Customs has said it will stand by whatever results the tool churns out.

“With few checks and balances in place over the programming of the tool, amongst other things, there is a real risk of unfair prejudice,” said ARC chairman Adrian Marlowe.

“Even today, less than one week before the Budget, HMRC has said that it is still evolving the tool and may change the draft legislation.”

He added that reforming IR35 on such a “drip by drip basis” means that, despite the changes taking effect in under a month’s time, there is still “no clear and final position in sight.”

The ARC concluded: “The government appears determined to make hirers and agencies liable and use the tool regardless of the concerns.”