Following Holmes and Lineker, IR35 experts warn of a desperate, heavy-handed taxman, on the attack
Talk of the taxman appealing his IR35 case collapse against Gary Lineker has already begun.
Formerly of HMRC, Tom Wallace says should HMRC appeal to the Upper Tribunal, and if it rules IR35 to potentially apply, a lower court would play out Lineker’s working practices.
“[If the UT backs HMRC], the case will need to be remitted back to the FTT to hear evidence on the actual IR35 features of the hypothetical contract, between Lineker and the BBC/BT.”
Now of WTT Group, Wallace’s outline on Friday of what would happen if HMRC appeals its loss to Lineker follows HMRC telling ContractorUK that an appeal is under consideration.
'HMRC has a keen eye for famous TV presenters'
While revelatory, the disclosure by HMRC last Wednesday isn’t a surprise, as lifted by its IR35 win over Eamonn Holmes, HMRC will chase big names under IR35 until it cannot.
“If the last few years are anything to go by, it definitely shows that HMRC has a keen eye for famous TV presenters…which may be difficult [for these individuals when they have no final say in content and direction],” says Dolan Accountancy head of compliance Zeeshan Anwar.
“And while HMRC haven’t got it right every time with TV presents, as shown in the Adrian Chiles and Lorraine Kelly cases, they will likely continue their attack because of the large amounts of money at stake”.
'Both IR35 and off-payroll enforcement to continue'
Andrew Webster, managing director of Workwell Solutions echoed to ContractorUK: “The [Holmes] case reminds us that HMRC will continue in their efforts to enforce both IR35 and Off-Payroll.
“Further, we should expect to see more activity off the back of the government’s Spring Budget announcements on funding targeted at increasing tax collection.”
Seb Maley, chief executive of Qdos, believes the taxman probably welcomed the increased resources from the chancellor with open arms.
'HMRC desperate to prove a point'
“You’re left wondering who else HMRC has on its radar,” Mr Maley, an IR35 contract review expert said following the Holmes defeat.
“What this case does tell us is that HMRC is desperate to prove a point. The tax office wants to make an example of high-profile individuals."
"Often unfairly, I should add.”
'Treasury inquiry into HMRC failings'
Fred Dures, founder of PayePass, is concerned that such unfairness isn’t just confined to IR35 and needs addressing, if taxpayers are ever to have a tax authority they can trust.
“Outside of the IR35 arena, [HMRC’s] heavy-handed and unreasonable investigations and [it] failing to properly tackle tax avoidance… [collectively mean that] overdue [is a] Treasury Committee inquiry.”
A qualified solicitor, Mr Dures continued: “With only nine open current inquiries, surely there is capacity for the Commons Select Committee to inquire into why HMRC is getting [things] wrong so many times and what must be done to rectify the [department’s] many failings.”
'Compliance activity ramping up'
“Wow. First Gary Lineker, now Eamonn Holmes,” posted Dominic Johns of Qdos, trying to find his breath in wake of the respective judgments being unveiled just two days apart.
“What does this tell us? In short, HMRC is ramping up its compliance activity – no doubt keen to make a point with a high-profile victory.
“Recruiters, of course, are now liable for IR35 in many cases. With this in mind and given HMRC’s level of compliance activity, it’s vital that agencies continue to mitigate the risks of this legislation.”
But it’s also vital for agencies to get on the front foot according to Workwell’s Mr Webster, especially as the taxman is equally poised.
'Agencies not showing any interest in SDS'
“Many agencies have told their end-client that they need to create the SDS and send it to them, without, in a lot of cases, showing any interest in how the end-client has arrived at the SDS decision,” he said.
“The SDS is then only getting a basic administrative check - name, correct project, start date etc. And the fee-payer is not in a position to be able to check the validity of answers provided.”
The problem is, continued Webster, that if “HMRC doesn’t get what they want from the engager, they will go down the supply chain to the fee-payer” and be on the warpath.
“‘You agreed to the SDS and made a gross payment -- you are liable for any non-compliance identified,” he said, imagining what HMRC might say. “What checks, measures and systems are in place to ensure validity of SDS?’”
The Workwell Solutions boss concluded, with a warning: “There’s no mandatory obligation to do this under legislation, [but] HMRC will remind [agencies] of their Employment Status Manual which covers what makes a valid SDS. Post-HMRC soft landing, this is a weak position to be in.”
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