Following the release of the minutes of the latest IR35 Forum meeting this week, the first since HMRC’s IR35 Business Entity tests were published, another IR35 related question has been scrutinised by many industry experts.
Experts have long pointed out that those completing the P35 annual returns form have currently been asked “Are you a Service Company?” before asking about IR35 or MSC legislation. This was said to have created confusion as the guidance did not provide a definition of what a service company was. For this reason the forum agreed to make a change to this question.
The minutes of the July meeting states that; “In relation to IR35, it was noted the two part question 6 currently asked on the P35 will be merged into one “Are you a service company who has operated the Intermediaries legislation (sometimes known as IR35) or the Managed Service Companies legislation?”. The question will be embedded into the PAYE regulations for 2013/14 and it will become a legal requirement to answer it on the last return for the tax year.”
A lot of the previous concern regarding the original wording was that contractors operating their own limited companies were required to respond but often unsure how to answer the two-part question. One expert has described the change as reassuring, especially given HMRC’s threat to impose penalties for non-compliance, and should make answering the question much more straightforward for many contractors who are outside IR35.
ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.