The topic of IR35 has received a lot of coverage this year, and following a high profile review into public sector contractors the government and HMRC have stepped up their investigations into workers who are operating via personal service companies and who fall within the IR35 legislation.
Chief Secretary to the Treasury, Danny Alexander, spoke at the liberal democrats party conference last week about the government’s desire to take action against those who take contracts with the government and fail to pay the correct amount of tax. This increased action was evident through figures revealed this week after a freedom of information request from legal publishers Bloombury Professional.
They found that following a drop in IR35 investigations over the last few years, HMRC stepped up their efforts, leading to more than double the number of investigations in 2011/12. The increase from 23 to 59 investigations also led to a higher tax yield from the investigations, rising from £219,180 in 2010/11 to £1.25m last year.
Bloomsbury Professional managing director Martin Casimir described the figures, saying; “It looks like HMRC has been playing catch-up on IR35 in the past year. They’ve gone from almost ignoring IR35 breaches to getting tough around the time that the public sector personal service company scandal began to break.”
Following this disclosure of this information, a HMRC spokesman confirmed that they have strengthened their specialist IR35 enquiry teams, and intend to continue their efforts into the next year. However, they also added that they have issued new guidance to help make IR35 easier to understand, as the work of the IR35 Forum has shown.
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.