Contractors' Questions: What does HMRC ask in an IR35 investigation?

Contractor’s Question: What does HMRC ask in an IR35 investigation?

Expert’s Answer: In the case of ‘The Trainline two,’ examples of the status questions which HMRC asked as part of its initial investigation were:

1. Was there someone at the client organisation who told the contractor what to do or where to attend?

2. What was that process, which was put in place?

3. Was the contractor required to perform the work personally?

4. Was the contractor prevented from providing services to anyone else for the duration of the contract? If so, can you give details?

But HMRC also is ramping up its IR35 compliance activity under the new off payroll rules, introduced on April 6th 2021.

In the department’s targeting of businesses in a number of industries, officials are seeking a host of information regarding the recipient’s IR35 processes. HMRC is therefore asking:

1. What are the specific processes in place to manage IR35 reform?

2. How many contractors are engaged?

3. How is IR35 status assessed? 

4. Are contractors engaged directly or via agencies?

5. How many contractors are inside/outside IR35?

6. How many contractors transferred inside IR35 upon the introduction of IR35 reform?

The expert’s answer is based on details from Qdos, a status advisory which specialises in IR35 contract reviews.