Improved IR35 programme nets HMRC over £1m

RA Now

HM Revenue & Customs has revealed that it yielded £1.1 million from investigating disguised employment via the IR35 legislation, after adopting a new approach piloted following discussions with the IR35 Forum.

Launched in April 2012, the approach involves strengthening specialist teams and centralising IR35 enquiries within the teams, as well as attempting to establish the facts faster and close enquiries that were low risk quickly.

Eleven organisations comprise the forum, including the Freelancer & Contractor Services Association, Professional Contractors Group, Recruitment and Employment Confederation and the Association of Professional Staffing Companies.

In a statement, HMRC stated: “In 2012-13 HMRC opened 256 cases where IR35 was the main risk. From the IR35 enquires closed in the 2012-13 year (some of which were opened prior to 2012-13) the yield was £1.1 million. HMRC closed 85 of the cases opened in the year for nil. Customer co-operation enabled many of these cases to be closed within 3 months of being opened, but all were closed within 12 months, fulfilling HMRC’s commitment to close cases early where on investigation they were low risk.

“Some of the cases opened in 2012-13 are still open and these represent cases where HMRC consider there are still risks that need addressing.” 

The new process and guidance is still under review from the IR35 Forum, HMRC stated.

“We are pleased that HMRC is constantly reviewing its guidance to ensure that any measures introduced are targeted at the right areas,” said APSCo’s head of external relations, Samantha Hurley. “It’s crucial however, that HM Treasury focuses on giving legal certainty to the millions of SMEs out there.  At the moment few tax advisers can say with certainty whether SMEs fall into the provisions of IR35 or not”.