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Qdos: Are IR35 enquires actually rising?
by Susie Hughes at 09:53 26/06/14 (News on IR35)
Specialist contractor insurance providers, Qdos, looks at the evidence and experiences of increased activity in IR35 investigations, following HM Revenue and Customs new approach to compliance with specialist teams and targeted enquiries.
Qdos writes:

It’s easy enough to understand contractors’ scepticism when another advert for competitive IR35 insurance pushes its chest out amongst the many congested on a contractor site. Often, the sheer amount of content about IR35 can distract from the true sincerity of the current situation.

Usually, when another article emerges telling of more investigations than ever, it will be met with much scepticism. But how much truth actually is there buried in the crowd of IR35 warnings?

HM Revenue and Customs now utilise four teams, each containing ten individuals, specifically dedicated to launching as many IR35 enquiries as possible.

Possibly spurred on by a considerable dip in enquiries between 2008 and 2011, HMRC genuinely look set to launch more enquiries than ever before. In the last tax year, their cases actually quadrupled.

IR35 expert and ex-revenue inspector Andy Vessey recently stated that: “Over the last few months I have seen an increased number of IR35 enquiries being taken up. Previously HMRC appeared to be concentrating their efforts primarily in the public sector.

"Whilst they still continue to be interested in the public sector they are now casting their net further afield.

"Despite HMRC's promises of two years ago to close down enquiries promptly where they had sufficient and satisfactory evidence to do so, and having seen this promise fulfilled for the last 18 months or so, I am now seeing signs of HMRC slipping back into their bad old ways of prolonging enquiries unnecessarily. Certain Status Inspectors are now digging their heels in and their actions appear to be premeditated.”

Kate Hardy, an expert consultant who has been dealing with IR35 for 12 years now, also warned that: “Most of the enquiries we’re defending are ones where the contractor has no insurance and with those clients they’re having to pay on an hourly consultancy rate rather than being able to rely on an insurance policy to cover all of these costs.”

Even contractors seem to be grasping the reality of the situation at hand. One contractor on a popular social networking sight issued their own warning from experience, stating, “Believe me IR35 is getting more vicious and I'm hearing of people being asked to complete a compliance check on a regular basis. Public sector contractors feel hounded and there is every possibility that many will exit the service leaving key services at real risk.

“Because there has been no successful challenge to the rules that HMRC make up annually, this will get worse and more complicated by the year...”

Investigations opened...
2000/2001...........16
2001/2002..........261
2002/2003........1,016
2003/2004........1,166
2004/2005..........771
2005/2006..........656
2006/2007..........158
2007/2008..........104
2008/2009...........25
2009/2010...........12
2010/2011...........23
2011/2012...........59
2012/2013.........256

Tax yield from IR35 investigations in...
2000/2001.............nil
2001/2002.............nil
2002/2003..........£946,275
2003/2004........£1,973,851
2004/2005........£1,447,796
2005/2006........£2,316,351
2006/2007........£1,906,619
2007/2008........£1,730,640
2008/2009....... £1,430,358
2009/2010..........£155,502
2010/2011..........£219,180
2011/2012........£1,250,000
2012/2013........£1,100,000

Note: The tax yield in a certain year des not necessarily equate to the investigations opened in that year.

Shout99 works with Qdos to offer a range of insurances and services specifically tailored to the requirements of a freelancer. For more information, see Qdos Consulting

Shout99 has a dedicated news area for comprehensive coverage of IR35 policy, Government and HMRC initiatives and legal cases, see Shout99's News on IR35 section. You can also sign up for free email alert when new articles appear in this section.

**********************************************
Advertisement - Protection against IR35 investigations (FO35)
**********************************************

Advertisement
Protection against disputes with HMRC on tax matters, including IR35, is available for £116.00 a year.

Freelancers Outside IR35 (FO35) is a complete operating system for small businesses with guidance on compliance; draft contracts; a helpline; status assessments; and representation by Qdos Consulting in the event of a dispute with the Revenue on tax; VAT; or IR35 issues.

FO35 is available online for immediate cover for £116.00 a year. For more information or to order, see......Freelancers Outside IR35 (FO35).

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Susie Hughes © Shout99 2014

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