HMRC met with regular member of the forum on January 11th in order to have detailed discussions about the administrational plans for IR35 and the current ideas for the planned business test. A spokesperson confirmed that “following working groups with the external stakeholders, we felt that there was more work to do prior to holding another full Forum meeting”, which led to the postponement.

One of the groups involved in the IR35 Forum, the REC, spoke about the discussions in the November IR35 Forum meeting , which included issues surrounding this tiered business test. They believe that this would help to sift out lower risk IR35 cases and give contractors clarity on their self employed status.

Whilst they also confirmed that progress on the business test required further discussions with HMRC, their representative on the IR35 Forum, Gillian Econopouly, spoke positively of the role of the group. She commented;

“Being involved in the IR35 Forum has provided a unique platform for taking forward the views and recommendations of recruiters in sectors such as technology, engineering and interim management. Whilst the discussions are taking time, we are working hard to establish common ground with HMRC and remain confident that we can help deliver genuine simplification for recruiters and the contractors they place.”

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor

The main talking point in 2012 was of the Agency Workers Regulations, which eventually came into place in October after much speculation. These regulations brought the right to equal pay and other rights for all agency staff, thus having an impact on the way that some contractors operated.

Another legislation that has been heavily in contractor news this year is IR35. This legislation was reviewed earlier this year by the Office of Tax Simplification; they made a number of recommendations to the Government which eventually led to the formation of the IR35 Forum. This group are continuing to work towards a better approach to IR35. Alongside this HMRC were involved in a number of high profile IR35 contractor cases.

The PCG also held their 3^rd National Freelancers Day in November to celebrate the role of contractors and freelancers in the UK. They also used this celebration to announce their latest findings into the freelance community, revealing there are now 1.56 million workers in the UK.

2011 has been a successful year for ICS and all of our contractors, and we look forward to working with you all over the next year!

ICS are one of the leading contractor accountants and administration companies and have helped thousands of contractors working in a range of industry sectors. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

The hearing related to an IT contractor, John Spencer, and his limited company, JLJ Services Ltd, through which he was contracting to German insurance company Allianz. Mr Spencer worked as a contractor to Allianz between 2000 and 2008, however his contract changed in 2004 so that he was effectively employed by Allianz, albeit in a contract role.

Mr Spencer, represented by ClearSky accounting, had been faced with a tax bill of more than £200,000 including interest from HMRC for the length of his time at Allianz. The tribunal found that his contract up until the end of December 2003 fell outside of IR35, however his work from 2004 onwards was liable for tax as he was inside IR35.

A number of factors were picked up, such as a lack of a proper right to substitution, which the tribunal judge called a “sham” in this instance, and the degree of control that Allianz had over Mr Spencer in terms of engaging with him indefinitely. So whilst Mr Spencer was found to be inside of IR35 his liabilities were much less  than originally demanded, which meant a partial victory in this case.

Following a number of IR35 cases in recent months, employment law specialist Kate Cottrell, of the OTS and IR35 Forum gave some advice to those taking contracts. Speaking about the case she said; “[It] is indeed the first time we have ever had a split. It clearly highlights the need to consider IR35 for each and every contract, [at both] extension and renewal.”

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

Kate Cottrell, of employment law specialists Bauer and Cottrell, spoke to Shout99 to offer an expert view of the current IR35 situation following the risk assessment discussed in November’s meeting. The way that HMRC identify potential IR35 investigations has been one of the key topics in the previous IR35 Forum meetings.

Ms Cottrell revealed that current HMRC proposals focus on their ‘risk profiling policy’. “This is the system they use to decide whether or not to investigate you in the first place. This will enable HMRC generally to restrict IR35 investigations to ‘high risk’ cases.”

She continued saying that high risk cases will be outlined by April, bringing clarity to those involved. It was also stated that HMRC are committed to improving their compliance activity for these cases which could lead to more high risk investigations. Whilst she admitted that there is still a lot of work to do, Ms Cottrell said “we should have a much improved administration of IR35 by April 2012.”

There were further interesting comments regarding HMRC’s IR35 strategy, with the high risk cases expected to be targeted in order to “yield significant sums compared to the past”. Ms Cottrell called this “good news so far for those at low risk, providing we can reach agreement on who falls into which group and providing we have good guidance and support. When this is achieved IR35 will be much easier to deal with for everyone.”

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

Recent figures regarding HMRC revenue from tax evasion and avoidance investigations totalled £16.5 billion in the last 12 months. This was a 37% rise from last year figure of £12 billion which has been linked to the aggressive approach that HMRC have taken in the last year, especially in regards to the review of IR35.

A leading accountancy firm, UHY Hacker Young, commented on these figures saying that the government and HMRC “seem to believe that they found the secret of alchemy.” A spokesman from the firm continued that, “All they need to do is invest more money in tax investigations and compliance work and the extra tax income will keep flooding in.”

With HMRC clamping down on taxation issues across all sectors it is becoming more important than ever to remain compliant, especially with new regulations including the Agency Workers Regulations adding extra red tape to small UK businesses.

ICS are one of the leading contractor accountants and administration companies and have helped thousands of contractors working in a range of industry sectors. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

Following the October IR35 Forum meeting, HMRC and the PCG both presented their views and ideas. After discussing the clarification of lower risk IR35 cases in October HMRC proposed amending their risk rules, and are aiming to focus increasing their compliance activity against higher risk cases being used to disguise employment.

The PCG also presented further information about any future IR35 business tests, which were one of the three original proposals earlier this year.  They announced that they are now looking at a ‘tiered test’ approach, which would require the use of particular indicators and HMRC data.

One of the action points for the forum’s next meeting in January was for HMRC to identify and agree on the indicators that define a business for the purposes of IR35. They also agreed to provide an update on the four main areas currently under discussion; these being the IR35 Helpline, Guidance, Risk and Review.

A full update of the IR35 Forum’s minutes can be found on the HMRC website.

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

The PCG’s original Freedom of Information (FOI) request found that HMRC raised just over £9 million in IR35 tax between 2002 and 2008, however a subsequent FOI request by news site Contractor Calculator has found that between 2000 and 29,000 contractors ‘self-certified’ themselves as being inside IR35. This means that over the last 10 years they have paid a minimum of £920m, according to Contractor Calculator’s Dave Chaplin.

This additional, and substantial, sum of income tax and national insurance contributions outweighs the PCG’s arguments that “IR35 makes very little money for the Government” and commentators have said that it makes it the decision to retain IR35 earlier this year more logical.

The Government are however still working to review the IR35 legislation as it continues to be a burden to thousands of self employed workers. The IR35 Forum are due to meet later this month in order to continue discussion regarding the legislation.

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

The short quiz consists of 9 questions all about freelancing. It covers IR35, VAT, expenses and much more. It is a useful tool for freelancers and contractors, but also anyone involved with them. ICS fully supports National Freelancers Day and you can take the quiz by clicking here.

Our Managing Director, John Lyon, will also be attending the Freelance Lecture in London on 23^rd November. The lecture will feature leading experts discussing flexible working and workforce trends. You can find out more here.

National Freelancers Day is in its third year and year on year it has reached out to more people. Last year the message reached over 1 million people and supporters included Prime Minister David Cameron. You can stay connected with National Freelancers Day by liking their Facebook page or following #NFD23NOV on Twitter.

Take the quiz and find out just how much you know about freelancing!

HMRC had requested feedback at the previous meeting in August and were grateful for what they had received. However they did express a concern about the lack of details and specifics when discussing the areas of their IR35 administration which needed improving. HMRC agreed to set out a broad framework of areas where specific feedback and views could be provided.

The forum also continued their ongoing discussion of the IR35 helpline and the HMRC guidance, for which the ten most frequently asked question would be addressed. Full minutes of the meeting can be read on the HMRC website. Identifying and informing ‘low risk’ customers was also part of the agenda.

Following the meeting and the release of detailed information into the actual number of IR35 investigations in recent years, PCG Chairman and IR35 Forum member Chris Bryce, expressed some strong views about the burden of the legislation.

“I’m not surprised, it’s what we’ve thought all along but I’m amazed, appalled and angry that so many people in the private and public sectors are wasting their valuable time on IR35 if this is all it takes in.”

“Chancellor George Osborne simply must remove this barrier to economic growth and do it as soon as possible. He has a great opportunity in the November statement to release businesses from this ridiculous burden and free up HMRC resource to work on better things.”

ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

This has led to the PCG today calling on the Government to provide further reasoning as to why the complex and often confusing legislation was retained.

John Brazier, Managing Director of PCG, commented: “It is now time for the decision makers to explain more clearly to freelancers and the public why the risk to the Exchequer would be simply too great if IR35 was abolished or suspended.”

The tax enquiries fell to a dozen in 2009/2010, which may have been as a result of speculation that IR35 was to be removed. However, a report into the options for IR35 by the Office of Tax Simplification resulted in a decision by the Government to retain the tax but improve its administration. Susie Hughes of Shout99 believes, “this could result in renewed activity in the area.”

Further information about the request and the response from HMRC can be found by clicking here.