IR35 news

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By Jonathan London on 8th January 2015

IR35 news

It’s been anticipated for over a year now, and finally we have the answers to the question that has been on every contractor’s mind: What is the outcome of the government’s IR35 review and what will it mean for me?…

While the IR35 Forum had made 32 recommendations to HMRC, only ten were agreed upon in the 48 page long final report on the review.

The recommendations agreed upon include those that relate to the guidance given by HMRC on issues relating to IR35, such as the body contacting Companies House with a view to including information about IR35 in any company start-up/registration guidance or arrange clear signposting to the relevant Gov.uk IR35 introductory guide….

HMRC release IR35 review

HMRC also accepted the recommendation of exploring the creation of links to IR35 User Guides from other selected HMRC/Gov.uk web pages, such as pages related to the start-up of employer PAYE schemes or starting up companies/partnerships….

Referring to the promotion and communication of IR35, HMRC was not so forthcoming and only accepted one recommendation, which stated that a targeted communications campaign should be run by HMRC with specific industries, where there has been a rapid growth in personal service companies to raise IR35 awareness e.g. oil and gas….

HMRC did, however, accept all suggestions on Business Entity Tests, which actually include abolishing them, upon which HMRC also agreed to notify HMT/Cabinet Office of this outcome….

When it came to the recommendations on HMRC’s helpline and contract review service, all four were rejected, including the support for external advisors may unlock more open discussion and compliance. Working with those advisors to support the advice they provide to their customers will create a more open dialogue….

Finally, regarding the recommendations on HMRC’s new compliance approach to IR35, the consideration of providing an email address for clients to submit information and documentation to speed up the process… was the only one accepted.

While it is positive that HMRC has agreed upon a number of the recommendations, it does still leave 22 rejected, which include suggestions such as: HMRC should write letters to people who they have identified as potentially being affected by the IR35 legislation. This should help to raise their awareness, explain how the legislation works and highlight where people can go for help and what they need to do if they think they are inside the legislation but haven’t been operating it.…

Obviously, such factors would undoubtedly be paramount in ensuring that all contractors are fully confident that they know where they stand when it comes to IR35.

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