Contractors shun professional IR35 contract advice

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Contractors shun professional IR35 contract advice

Posted Oct 15, 2008

Most contractors aren't making the effort to ensure that their contracts are IR35 compliant, putting them at risk from HMRC investigations, according to a new survey. In fact, most contractors have never had their contracts reviewed.

This surprising result follows the release of Contractor Calculator's latest survey which shows that whilst most contractors are sure that they won't be caught by the IR35 rules, only a fraction have sought a legal opinion to find out if this is actually the case.

Dave Chaplin, chief executive of the contractor site, told us:

"It looks like a significant number of contractors are playing Russian roulette with their tax affairs. The gun is HM Revenue & Customs, the bullet is the IR35 tax legislation. And with HMRC needing to collect as much revenue as possible to fill the Treasury's empty coffers, it looks like it's only a matter of time before the trigger is pulled."

Survey Results

Some of the other main findings were:

93% of contractors believe their current contract is not caught by IR35, but only 24% have had their contract professionally reviewed to see if this is actually the case.

56% of respondents never get their contracts reviewed for IR35 status at all

On the right of substitution, which is increasingly seen as a key component of IR35 defence, just 13% had an unfettered right of substitution, but only 5% have exercised that right

5% actually admit they would be unlikely to successfully defend their IR35 status if challenged, and 69% said 'maybe'.

These latest results are even more worrying than a similar one conducted in August 2008, which showed that 13% of contractors make no effort at all to have their contracts reviewed.

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