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HMRC is redoubling its efforts in pursuing IR35 enquiries

Bloomsbury Professional recently made a freedom of information request – the findings of which suggest that HMRC is cracking down on IR35 avoidance. The legislation, which was announced back in 1999 in a budget press release number IR35 – now known simply as IR35 – sets out to eliminate tax avoidance through use of intermediaries.

As a result of recent high profile cases, HMRC has, according to one of its spokesmen, largely strengthened its investigative teams and has worked to redouble its enquiries. It believes it can recover about £100m, including penalties and interest, by investigating more thoroughly the last several years and by increasing further its efforts for 2012/13.

Freelancers paid ‘off payroll’ such as those recently publicised who were working in the public sector, may find themselves subject to inquiries. After paying only lip service to IR35 legislation in the past, HMRC started to get tough just as the story of such tax avoidance began to break. IR35 compliance is being centralised and it is hoped by HMRC that its aggressive activities will encourage a reduction in avoidance.

The self-employed and small business owners concerned about their position can seek advice from contractor accountancy services. It is wise to ensure, particularly for self-employed freelancers, that current legislation is not contravened. It should be noted that the emphasis now being placed by HMRC on IR35 breaches seems to be part of a much wider intention to actively pursue tax avoidance of all kinds.

Posted by Peter
October 22, 2012

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