A new initiative aimed at simplifying HMRC’s existing IR35 checks has been met with strong scrutiny. A number of bodies which sat on a recent ‘IR35 Forum’ advised the taxman that the guidance for contractors, which was published in early May, was counter-productive and will prevent high risk cases from being indentified. The advisers on the forum have said in a joint statement that the newly published guidance neglected to reflect their advice and could have the potential to make the system more complex rather than achieve its goal of simplification as the government promised.
It would also seem that the murky waters at HMRC are even cloudier now as the advisers at the IR35 forum have said that the new initiative missed the opportunity to bring ‘clarity, transparency and fairness in dealing with IR35.’ In the initiative HMRC have proposed 12 tests and a points system which will help contractors gauge their tax status.
It was over a year ago now that HMRC was urged to create key structural changes to the system. At the time it was clear that something solid being formed was going to be a long way off. It would seem that the Office of Tax Simplification (OTS) have managed to ‘stimulate debate’ over the matter, as they initially set out to, but at this stage of the game it looks like any such debate has been met with lukewarm reception from all parties. On a plus though at least some decent steps have been taken in order to clarify the situation and level the playing field for prospective contractors who are confused about their current status within HMRC guidelines. No doubt the debate will continue for awhile before a clear solution has been found.