HMRC throws its weight behind IR35 digital tool

HM Revenue & Customs has clarified that it will stand by the results of the IR35 digital tool.

The clarification is necessary because finance managers looking to recruit contractors for the NHS were privately told that such a commitment to the tool’s results cannot be given in writing.

At the time, the HMRC officer briefing the managers on the eve of Budget 2017 also said there were issues with a question in the tool, which by then had been live only a few days.

But yesterday, some 24 hours before the tool’s off-payroll rules took effect, HMRC threw its weight behind the online status service, when asked if its results would be honoured.

“While we will not oblige anyone to use the tool, HMRC will stand by its results where correct information has been inputted in line with the guidance,” a HMRC spokesman said.

The spokesman added that the Employment Status Service – the tool’s official name – had been “extensively tested” and “worked extensively” on with affected parties to develop it.

However the Revenue’s show of support for the tool, and specifically its redoubled commitment to uphold non-fraudulent based results, comes too late for the NHS mangers.

Since they sought but were denied an assurance in writing from HMRC that it would stand by the results, the health service has headed off having to use it by simply deeming its entire PSC workforce inside IR35.

As well as raising the issue of whether the NHS has breached the new IR35 legislation’s ‘reasonable care’ clause, the move has brought the NHS’s understanding of the reform into question.

Health service bosses believe that, from today, it is HMRC that automatically treats all PSCs supplying public sector bodies as inside IR35 when, in fact, it is for the bodies engaging the PSCs to decide which of their PSCs, if any, are inside.

The spokesman for the Revenue confirmed the position: “It remains the responsibility of individual engagers to understand and decide how the rules apply to the individuals they engage.”

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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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