A leading taxation expert, who works as a member of the IR35 Forum, has suggested that the new IR35 investigation process is much improved after working on a client case. Kate Cottrell, of specialist employment tax advisors Bauer & Cottrell, spoke about her work with the recent case.
Speaking to contractor news site contract eye, Ms Cottrell said that her firm’s first experience in dealing with the new process for IR35 compliance was successful and more transparent. She was also pleased to report that it took HMRC just 3 weeks to give an ‘all clear’ following a technical submission from Bauer & Cottrell.
She described the practice of a contractors first receiving an IR35 compliance letter as refreshing compared to the old practice, as initially it helps establish that the contractor investigation is targeted at IR35. The process continues, to allow the contractor a chance to explain their position regarding IR35, adding a logical level before any deeper investigations occur, and also allowing a chance to stop the investigation altogether.
Another aspect of the new process that Ms Cottrell was pleased about, calling a “key change”, was that contractors with a low risk of IR35 are now informed, rather than the confusing practice that occurred previously, as she explained;
“In the past cases were often dropped because HMRC were not going to pursue them and we had letters saying ‘although we think IR35 applies we are not going to pursue the case.’ This was most unsatisfactory. It amounted to the same thing but we used to write back to HMRC and say that we have advised the contractor that HMRC accepts that IR35 did not apply. All in all we now have a transparent process which is good news for everyone.”
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.
I’m glad to see there is some positive news re IR35.
I find it very frustrating that tax law and employee law isn’t in synch. The unfortunate contractors that are caught by IR35 end up having to pay the full tax liability, however, do not have any employee rights from the contracting company. There has to be a way to make this simpler and more logical.