Since HMRC clarified their new approach to IR35 investigations (including the publication of their new Business Entity Tests) enforcement activity appears to have been stepped up significantly.

The PCG and Abbey Tax created a bit of a snafu recently by over-egging the volume of new enforcement activity, however IR35 specialists QDos recently provided a rather more realistic update on the situation, including details of the new task forces set up to tackle disguised employees in Croydon, Edinburgh and Salford.

Following the enforcement shake-up, IR35 investigations will now be more targeted, and each contract a freelancer or contractor enters into must be assessed for IR35 purposes individually.

The Business Entity Tests can be used by freelancers and contractors to self-assess their IR35 status, however HMRC have been very clear that a “low risk” result in no way precludes that individual from an IR35 investigation.

How it works

Initially, contractors will be sent a letter requesting details of their income, contracts they have with all their clients, and any evidence they can provide that supports their IR35 position.

If HMRC are satisfied you are outside IR35, they will close the investigation and promise not to enquire about your status for three years, however if they decide you fall into high risk category a full-blown investigation could follow.

How we can help

As a PCG-accredited accountancy firm, all our accountants are fully up-to-speed on IR35 issues, and can help our clients where necessary. With HMRC stepping up enforcement activity, now is the ideal time to confirm your status. If you have any doubt about your IR35 situation, get in touch with your account manager.

We also have a partnership with QDos, who offer a range of IR35-specific products, including individual contract assessments and investigation insurance.