Something picked up from the latest HMRC IR35 forum minutes:
“7. As previously reported, from April 2012 HMRC
restructured its compliance working on IR35. Cases are
now primarily worked by 3 teams, whose membership
contains experienced officials on status work. The 3
teams, located in Croydon, Edinburgh and Manchester,
but cases are not restricted to there particular
geographical area and can be drawn from anywhere in
the country. The overall strategy is overseen by one
individual.
“8. This focused approach has allowed for an increase in the
number of reviews taken up by HMRC. HMRC also
reported an improved turnaround timeline of cases and
gave an example where a review had been concluded
within a period of 6 weeks.
“11.HMRC were asked how they were measuring approaches taken across their different offices. HMRC advised that any inconsistencies of working practices in different offices should be minimal since the restructuring and introduction of single strategic oversight of the 3 teams. However there might be an exceptional occasion where an Inspector outside of these teams might take up an IR35 case but, increasingly, HMRC is looking to concentrate the work in the 3 specialist teams.”
Anything to worry about? Well, maybe. Certainly in recent years HMRC don’t seem to have put much resource into IR35 compliance, and this perhaps heralds a change to that. However IR35 is difficult for them to enforce, and in reality it will be the weaker cases most at risk – whilst HMRC have claimed scalps at the tribunals, in some cases in surprising situations that people thought were outside or IR35 – for the most part recovery against a company or its officers where there has been a proper assessment of IR35 risks and a genuine effort to work in a compliant way is quite difficult.
IR35 was in essence a strategy to stop abuses, as was the later MSC legislation, and where genuine business arrangements can be shown, even if they are with one client only, the chances of a successful IR35 case against a PSC/contractor are quite low.
That said (a) seeing a enquiry off can be time consuming and expensive – we do recommend insurance through our Professional Fee Protection scheme or something like PCG or FSB and (b) it is vital to go through the process of risk assessment, IR35 contract review, and documentation of your conclusions and retaining favourable evidence – those most at risk are those who just ignore IR35 thinking “It can’t happen to me”.