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IR35 Forum - HMRC proposals to target higher risk IR35 targets
Posted Nov 23, 2011
The latest IR35 Forum minutes, from 9th November 2011, have been published on the HMRC site.
The Forum was set up to help oversee improvements in the way IR35 is currently administered, and is attended by experts from various industry bodies, as well as HMRC representatives.
Although there are few headline grabbing points contained the minutes of the fourth Forum get together since its creation following Budget 2011, some progress has been made, particularly on new IR35 risk profiling measures.
HMRC plans to focus on 'high risk' IR35 cases
One of the main discussions revolved around the current risk strategy employed to identify potential IR35 cases.
In a presentation, HMRC said that it intends to wants to increase its compliance activity against 'higher risk cases', and to amend its risk rules to "consider the overall nature of an intermediary, rather than narrowly at isolated contracts."
In order to help contractors (and others) work out if they are considered 'low' or 'high' risk, HMRC has proposed that it publishes its general risk criteria.
Other attendees welcomed the proposal, but some suggested that published risk criteria may not be sufficient to provide contractors with piece of mind that they wouldn't be considered 'high risk'.
HMRC said that the published criteria, together with improved general guidance, would "enable the majority of those providing their services through intermediaries to judge their level of risk."
Ultimately, focusing on higher risk cases can only be a good thing for the industry as a whole, although some cases will inevitably have to be referred to the Tribunals.
Other points from the meeting
- In a presentation to the Forum, the PCG said they wanted to propose a tiered test approach where the indicators of business dictate the level of HMRC intervention.
- Both PCG and HMRC proposals for future IR35 enforcement do seem to be reaching some areas of parity, especially over focusing on the nature of the business an individual is involved in first, before involving case law.
- It was suggested that HMRC could take into account whether or not a business had taken specialist tax advice over IR35, when identifying risk.
- Current proposals are for HMRC to introduce the new risk profiling and process from April 2012.
- The next meeting is due to take place on 18th January 2012.
You can read the minutes in full, and past IR35 Forum minutes on the HMRC site
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