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HMRC business test only a minor change to IR35 administration
Posted May 2, 2012
Since the details of the proposed HMRC IR35 business test were first posted online last week, some have expressed 'shock' at these so-called leaks, but one must not forget that the official test itself is just a minor development in the process to overhaul IR35.
As we await the official publication of both some new IR35 scenarios and an HMRC 'business entity test', both aimed at helping people assess their risk exposure to an IR35 enquiry, the details of the proposed test have been published online by a number of contractor sites, including here on Contract Eye.
As Kate Cottrell from employment experts Bauer & Cottrell commented after we first published our piece, the new test makes no difference at all to the underlying IR35 legislation, nor to how IR35 status is determined;
"All the test does is demonstrate HMRC's risk profile and how you would be viewed by them."
However, from reading the headlines on some contractor news sites over the past few weeks, one might think that the forthcoming tests represent a landmark moment in the history of IR35, when in fact they do not.
In our earlier piece, Kate Cottrell pointed out that "these tests are a minor part of the improvements being made to the administration of IR35."
Whether or not the 'leaked' business test questions and scoring remain intact when the finalised test is published online, unless the way the answers are scored changes fundamentally, it seems likely that the vast majority of contractors will be at a 'medium' or 'high' risk of an IR35 investigation.
And will this new test help provide extra clarity for contractors concerned about IR35?
So, although nothing will have significantly changed to the way IR35 is administered, it looks like the service providers, organisations, and news sites which have blossomed over the past decade as a direct result of the IR35 legislation, are likely to be in business for some time yet.
The business test and typical IR35 scenarios are most likely to be published on 7th May, and we will no doubt be competing with dozens of other sites to bring you any 'breaking news' nearer the time.
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