IT Contractor FAQs - Frequently Asked Questions

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Should contractors use the HMRC contract review service?

Posted Jun 2, 2010

This answer was provided by Seb Maley from Qdos Consulting.

Contractors should never use IR35 Customer Service Unit if they wish to avoid being subject to HMRC's unwanted attention.

Over the years there is little evidence to suggest that HMRC are even handed when reviewing the contractual and working arrangements. Asking HMRC to provide an opinion involves them entering into dialogue not only with the contractor but also the end client and agency. They will obtain a copy of the upper tier contract between the agency and end client and this may not mirror the freelancer - agency contract which will then cause the contractor difficulties in arguing against IR35.

HMRC will seek to question both the contractor and the end client to establish the precise working practices. These questions are weighted and designed to steer the unsuspecting contractor and end client representative down an avenue of employment.

What starts as an innocent and honest request for an opinion can result in years of enquiry and an appearance at a Tax Tribunal. All very time consuming and costly. It's simply not worth the hassle.

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