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Forum discusses IR35 helpline and HMRC compliance measures
Posted Aug 2, 2011
The minutes of the second IR35 Forum meeting have been published, and covered areas such as the IR35 helpline, and how HMRC's compliance units intend to operate in the future.
Following recommendations made by the OTS earlier this year, the IR35 Forum was formed following Budget 2011 to oversee the improved administration of the IR35 rules.
The meeting minutes from 29th June 2011 show that further progress has been made following the inaugural meeting on 6th May.
IR35 helpline
One major concern for contractors has been that they may be targeted for IR35 checks if they use HMRC's official IR35 'helpline'. HMRC repeated that this is not the case, and that "the Helpline is in purely a customer service capacity".
It was agreed that, due to the nature of the service, the Helpline could only provide generic advice, and that HMRC would not approach a caller's client without consent.
At the start of any call to the Helpline, some Forum attendees suggested that callers should be told that the service was purely advisory and and information gathered would not be used for compliance reasons.
Business Educational Support Team
HMRC are considering setting up a new team to help educate employers, end clients and recruiters on IR35 issues, and the implication of using different business structures.
Many organisations appear to be unaware that the use of an intermediary (i.e. a limited company), does not necessary free clients and recruiters from their obligations under employment legislation.
IR35 Compliance Units
The Forum considered the need to address 'low level' IR35 abuse via non-review measures. This might include how to educate certain industry sectors which appeared to lack understanding of the IR35 rules via targeted letters.
The quality of HMRC's current IR35 guidance was also discussed in relation to IR35 compliance in general.
The Forum also discussed how current IR35 compliance teams operate. HMRC agreed that it was important to conclude IR35 reviews as quickly as possible, to minimise disruption to individuals, and the cost to the taxpayer.
HMRC said that one of the reasons why IR35 cases take longer to conclude than standard status checks was because of the need to obtain facts from the end client.
Other Issues
In the second meeting of the IR35 Forum, various other issues were also discussed, including:
Although happy to share details on its general risk strategy, HMRC are not happy to share details of its specific risk profiling measures.
HMRC said that the process for selection IR35 cases has been improved in recent years, and low-mid risk IR35 cases would now be addressed with interventions other than compliance reviews.
In advance of the next meeting, which takes place on 14th September 2011, Forum members have been asked to provide feedback on the quality of the current HMRC IR35 guidance material.
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