HM Revenue and Customs (HMRC) needs 3,000 inspectors for a taskforce to perform about 20,000 investigations per year, examining contractors using personal service companies (PSCs) in relation to IR35, according to Jason Piper of the Association of Chartered Certified Accountants (ACCA).
Giving evidence to the House of Lords Select Committee on Personal Services Companies, Piper pointed out that annually there were about 250 IR35 inspections, suggesting that a mere 0.1% of PSCs are being examined on an annual basis. He said that these figures may be interpreted in one of two possible ways: either IR35 serves as an effective deterrent, or people have sorted things out and know to get outside it.…
Piper spoke at the second evidence-gathering session for the Committee (here’s details of the first), where a total of six witnesses expressed their views. Overall, the main message witnesses tried to put across was that IR35 was too complicated for the average contractor and PSC to understand.
This view was supported by IR35 expert Kate Cottrell, who stated that the information available on IR35 was not sufficient and there were still many people who did not know what the legislation was about. She called for more transparency and guidance when it comes to IR35 compliance.
Another point that was discussed at the session was the increase in PSC numbers. One of the witnesses, Judith Freedman, professor of tax law at the University of Oxford, commented that there was no evidence that the rise in PSC numbers could be put down to IR35.
Watch this space for more news on the House of Lords Committee meeting – we’ll keep you up to date. You can also follow us on Twitter, Like us on Facebook, orfollow our updates on LinkedIn for the latest news and developments.
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