Since IR35 became law in 2000, HMRC have provided a contract review service for individuals who would like to know whether or not their contract assignments fall within the scope of IR35 or not.
The tax authorities say that, in order to establish the real relationship between worker and client, they will need to talk to all parties (as well as examine the terms of the contract).
If HMRC are happy that they have been able to access all the information they need to paint an accurate picture of the assignment, they will then inform you whether or not your contract would be one of ’employment’ were an intermediary not in place (your limited company) or one of ‘self-employment’. You can find out more about the HMRC service here.
Unsurprisingly, given the controversial nature of IR35, many advisors have urged contractors to only approach HMRC directly with caution, and suggest using an independent IR35 contract review service instead.
Should you use the HMRC IR35 service?
Here, Seb Maley, CEO from IR35 status firm Qdos Contractor provides his views:
“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 contractor – 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.”