IR35 Forum Administration Review: at-a-glance

In April 2012, HMRC began to pilot a new approach to IR35 administration which they developed with feedback from the IR35 Forum.

HMRC, in partnership with the IR35 Forum, completed a review of that new administrative approach in December 2014. The review was published in January 2015.

The Forum’s recommendations, and whether HMRC accepts those recommendations, are divided in the review into the following categories (i-v):  

i) Recommendations on HMRC’s IR35 guidance

Recommendation 1 - HMRC should contact Companies House with a view to including information about IR35 in any company start-up/registration guidance or arrange clear signposting to the relevant Gov.uk IR35 introductory guide.

ACCEPTED

Recommendation 2 - Continue to develop IR35 information as specialist guidance in the dedicated Gov.uk guides. This will include…taking account of any recommendations from the IR35 Administration Review, such as revisiting information relating to the IR35 Helpline/Contract Review Service, ensuring that this is clearly publicised and stresses the confidentiality of the service.

ACCEPTED

Recommendation 3 - Consider whether the IR35 Contract Review Service should be publicised on HMRC web pages relating to non-statutory clearances.

ACCEPTED

Recommendation 4 - Explore the creation of links to IR35 User Guides from other selected HMRC/Gov.uk web pages, such as pages related to the start-up of employer PAYE schemes or starting up companies/partnerships.

ACCEPTED

Recommendation 5 - HMRC should continue to take relevant opportunities to use guidance to publicise IR35 and raise its profile.

REJECTED

ii) Recommendations on IR35 promotion and communication

Recommendation 6 - HMRC should write letters to people who they have identified as potentially being affected by the IR35 legislation. This should help to raise their awareness, explain how the legislation works and highlight where people can go for help and what they need to do if they think they are inside the legislation but haven’t been operating it.

REJECTED

Recommendation 7 -HMRC and/or other IR35 experts to talk at events such as those held by various representative bodies/trade organisation providing their members with a seminar on IR35 and how to work out if you are within it and where you can go to for help.

REJECTED

Recommendation 8 - HMRC to put articles in the Agent update. This is an HMRC publication that goes to a number of agents. This could be used to remind agents about the IR35 legislation and provide them with links to the new guidance.

REJECTED

Recommendation 9 - Accountancy bodies to send out material or hold seminars to help to educate their members about the legislation. This should be supported by HMRC speakers. This has been highlighted by the Forum as an area of particular concern. Almost all of the accountancy bodies are represented on the Forum so agreement from them to take this action forward would help raise awareness with smaller accountancy firms…

REJECTED

Recommendation 10 - Other representative bodies to hold seminars with their members to help to raise the awareness of IR35 amongst agencies and end clients. HMRC speakers should support these seminars.

REJECTED

Recommendation 11 - Trades Unions should be approached, as part of a guest invitation to attend a meeting of the IR35 Forum as they have a large membership and this will help to raise awareness more widely.

REJECTED

Recommendation 12 - HMRC should run free of charge seminars. These would need to be at venues in the Government estate that would be free of charge to use.

This could also help to raise awareness across the public sector and be linked to the changes made as a result of the CST’s review of public sector.

REJECTED

Recommendation 13 - HMRC to use their Customer Relationship Managers to educate large businesses about IR35 and help them to understand the issues for them as end clients.

REJECTED

Recommendation 14 - HMRC should use their internal teams to ensure that when people first incorporate they are aware of the IR35 legislation and their responsibilities.

REJECTED

Recommendation 15 - HMRC should segment the potential IR35 population to help to target communications. It may be that this could be split into different behavioural groups such as vulnerable workers, deliberate abusers, unaware etc

REJECTED

Recommendation 16 - HMRC should add notes to the SA and CT returns, which link to the new IR35 guidance.

REJECTED

Recommendation 17 - A targeted communications campaign should be run by HMRC with specific industries, where there has been a rapid growth in personal service companies to raise IR35 awareness e.g. oil and gas.

ACCEPTED

iii) Recommendations on HMRC Business Entity Tests

Recommendation 18 - HMRC should abolish the Business Entity Tests.

ACCEPTED

Recommendation 19 - HMRC should notify HMT/Cabinet Office of this outcome.

ACCEPTED

Recommendation 20 - HMRC, representative organisations and other stakeholders should raise awareness of IR35 and the application of IR35 legislation in other ways. This could be by better publicity or possibly in the longer term by developing dedicated IR35 tools.

ACCEPTED

Recommendation 21 - HMRC/ HMT need to specifically warn against continued use of the BETs, or versions of them, particularly in the public sector.

ACCEPTED

iv) Recommendations on HMRC Helpline and Contract Review Service

Recommendation 22 - HMRC could consider giving a qualified opinion which is not guaranteed (or a view) even if

• they have not received the upper level agreement;
• the contract has not been signed
• the contract is not written down, but this will be a verbal view based on the information available to HMRC.

REJECTED

Recommendation 23 - Support for external advisors may unlock more open discussion and compliance. Working with those advisors to support the advice they provide to their customers will create a more open dialogue.

REJECTED

Recommendation 24 - This specialist team support for external advisors may extend to offering workshops on the subject of IR35 and enquiries. To increase the likelihood of external advisers attending such workshops, HMRC may consider providing CPD accredited training.

REJECTED

Recommendation 25 - HMRC should provide customers with an opinion based on the information they currently have and that a caveat is placed on this opinion. This will provide the customer with an idea that the way they are working is in an IR35 compliant manner provided they implement any guidance provided.

REJECTED

v) Recommendations on HMRC’s new compliance approach to IR35

Recommendation 26 - HMRC should do more to ensure that enquiries remain consistent with regards to the scope of the enquiry, the information requested and the timescales taken to respond to correspondence.

REJECTED

Recommendation 27 - An allowance for the time taken for the initial letter of enquiry to arrive should be incorporated into the overall timescale given to clients to respond to requests. Extra time should be given during holiday and busy tax return periods so unnecessary pressure and burden is not placed on the client.

REJECTED

Recommendation 28 - HMRC should provide explanations for the requests for additional information, the requirements for meetings with clients, the reasons for delays and the outcome of enquiries so the whole process is transparent and the client is kept sufficiently informed.

REJECTED

Recommendation 29 - HMRC should consider providing an email address for clients to submit information and documentation to speed up the process.

ACCEPTED

Recommendation 30 - HMRC should consider providing clients with a reminder or warning before proceeding to use information powers to enable clients to comply with the request for information as required.

REJECTED

Recommendation 31 - Where meetings with clients are requested, HMRC should provide an agenda so the client can evaluate the value of the meeting as many would lose income if they attended.

REJECTED (But seemingly agreed in principle)

Recommendation 32 - HMRC should inform the client if the end user is to be approached as a matter of courtesy.

REJECTED (But seemingly agreed in principle)