There have been some new developments on IR35 and the below summarises:-
|The minutes of the latest meeting of the IR35 Forum have been published and they show that HMRC is going to publish a ‘risk checker’ for IR35 on its website next month to help contractors assess their risk of an IR35 status challenge.A “business test”
will be made up of a series of questions, which are weighted and provide either a plus or minus scoring, which indicates if the business is ‘high’, ‘medium’ or ‘low’ risk in terms of a HMRC investigation relating to IR35. Also HMRC will move its IR35 compliance risk assessment away from considering each individual contract to reviewing the business as a whole.
HMRC will publish ‘scenarios’ on a trial basis to allow contractors to assess if HMRC might consider the risk level.Six scenarios will be published: Two “caught by IR35”; two that are “outside of IR35”; one not clear cut; and one where a contract starts outside of IR35 but moves inside IR35 due to a change in practice of the company.As above, the tests will be published on a trial basis and will be subject to review by the IR35 Forum.
These developments should be kept in context: There is no change in legislation,
Additionally, the scenarios (which of course as they haven’t yet been published, we don’t yet know what they are) are to be published on a trial basis and may change.
This news is bound to create a lot of speculation and debate although these changes have been on the cards for around a year. It is important that we wait and see what gets published before commenting further and also consider that they are aimed at providing certainty for the contractor and easier admin for HMRC. In practice, it is likely that only if HMRC start doing lots more inspections will it actually have a real effect and it makes sensible planning as important as ever.
We will provide further comments once HMRC publishes the questions and scenarios which we anticipate will be Tuesday teh 8th May