IR35 Contract Reviews now more important than ever
It had been thought(and half-promised) that the new coalition government what going to have a rational look at the current IR35 legislation, in an
effort to make it clearer, and also to find out why it cost 5 times as much to administer as the revenue totals it brings into the treasury.
Well it has been looked at, and the conclusion is, “let’s triple the amount of investigations”.
So, far from being watered down or more preferably, being quietly retired, HMRC has upped the ante and decided to take hitherto marginal cases to tribunal.
The explosion in self-employment status, in traditionally fixed employment areas, for example senior executives in institutions such as student loans and the BBC, has changed the game plan for the HMRC, who see this now as the tip of a very large iceberg of lower tax take.
Last tax year 11-12 there were 56 IR5 enquiries made, and so far this year the count stands at 193, although again there is no evidence since its introduction in 2000, that the administrations costs are ever covered by any extra tax taken in.
So, it is back to the future, with contractors now being advised to ensure they get a thorough IR35 Contract review performed.
Contract reviews should be performed by suitably qualified individuals who have received specific and going training from tax experts in the field.
Contractors should receive a highly detailed report showing strengths and any weaknesses of their current contract and working arrangements, and areas where their current contract could be bolstered for defenses against IR35.