HMRC tweaks off-payroll webinar script following IR35 adviser’s criticisms

Small but potentially significant wins over words – and numbers -- have been chalked up by an IR35 adviser who found 25 errors in a HMRC webinar on IR35 reform.

Status specialist David Kirk, who uncovered the litany of mistakes in March, says a version of the webinar run by HMRC last week (since his criticisms) is more accurate on two fronts.

First, the Revenue corrected a “shocker” of a mistake relating to how much VAT a client would need to pay an agency, initially made as HMRC forgot agency fees are also subject to VAT.

Second, and on top of HMRC clearing up what Mr Kirk yesterday maintained was a ‘schoolboy VAT calculation error,’ the webinar no longer implies that a SDS is a duty enshrined in law. 

'Acceptable'

“I criticised [originally] when HMRC said, ‘Once the client has decided whether or not the rules do apply, they must set out that decision in a status determination statement.’

“[Well in the latest HMRC webinar], ‘must' has been changed to ‘should.’

“This is acceptable”, continued Mr Kirk “as it no longer tells you that you have a legal obligation when you don't. Although you [still] might be forgiven for reading that into it.”

'Nitpicking'

Not ecstatic with his progress, the adviser says he shall continue “nitpicking” (what HMRC accused him of to ContractorUK) until HMRC proves that with IR35, it can “get it right.”

On whether an SDS must be a formal document, or whether it can just be an email for example, the founder of David Kirk & Co is not “sure” HMRC got its answer last week right.

The Revenue told an agency on the call: “There isn't a formal SDS document or template.

“However, HMRC has confirmed that the output produced by the CEST tool would be an acceptable form for SDS purposes as long as the information used is accurate and remains accurate. Individuals could enter the details into that system in order to produce a sample output.”

'CEST does not state that'

But Mr Kirk points out that the now-in force off-payroll legislation does say an SDS must “state that the client has concluded that the condition in section 61M(1)(d) is met, in the case of the engagement and explain the reason for that conclusion.’

“[But] CEST does not state that;” he says, “it says that ‘off-payroll working rules (IR35) apply [for example].’

“That answers a different question. It is possible that the legal condition is met, but the off-payroll working rules nonetheless do not apply. For example, where the contractor is engaged through an umbrella, even if it is one that does not operate PAYE properly.

The adviser added: “That ought to invalidate the SDS and mean that the agency can blame the client for any PAYE deficiency. Do HMRC really want to meet agencies putting up this sort of technicality in the tax tribunal?”

'Howlers'

For raising such a question, and because HMRC has ironed out only a few “howlers”, Mr Kirk took to LinkedIn to say that compared to the taxman’s March streaming, “not much” has changed.

He reflected of the Revenue’s April webinar: “We started off with an explanation of how all the participants' mute buttons were off so that they couldn't speak, but it might have been more pertinent to say that that HMRC's deaf button was on so that they wouldn't hear.”

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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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