IR35 will it affect us ?

From April 6th, public sector clients will be required to check whether their contractors pass IR35 using a new online tool yet to go live on HMRC’s website. It’s a pretty uncomfortable time for contractors to say the least; they are expected to continue as normal when their employment status is placed under the microscope. Given that 21 cases relating to IR35 have made it to court thus far, it seems very bold of HMRC to believe an online questionnaire would reduce or even eliminate the need for expert consultation on both sides. There could be a myriad of issues that affect a contractor’s employment situation, so to learn that the future of their employment, tax and National Insurance liabilities will come down to a digital ‘yes’ or ‘no’ is daunting.

How does this affect our industry? Well if the public sector adopts it, the chances are it will create precedence that can be used against the engagement of drivers. At best it will give HMRC the motivation to push the limits about how they look at enquiries and investigation. Although, enquiries are becoming more automated because of the HMRC ‘CONNECT’ software, which matches details on tax returns against financial information held, they do still follow trends …

Many enquiries start as books and record checks. Enquiries range from a simple check to a full-scale investigation. But in the same way many status enquiries start as VAT inspections. Don’t be surprised when questions are asked that don’t necessarily make sense in the context of why the Inspector is there and then you find yourself defending the status of your subcontractor drivers.