IR35 is back on the political agenda due to MPs on the Public Accounts Committee being concerned about thousands of public sector and BBC workers being paid “off payroll”. The IR35 tax legislation applies where an individual is working for an end-user where the relationship, if it were not for the imposition of a limited company, would be one of employment.
The number of IR35 investigations has more than doubled in recent years from 23 in 2010/11 to 59 in 2011/12. Whilst these figures look low compared with the 1,000+ investigations in 2003/04, HMRC are recovering significantly higher amounts of tax, £1.25m in 2011/12 compared with just £219,000 in the previous year.
Given the recent publicity HMRC are now under increasing pressure to concentrate on IR35 and now intends to increase the number of IR35 enquiries to at least 230 a year. HMRC also intends to carry out a risk-based review of the 2,400 public sector cases found in the Treasury’s Review and the 25,000 cases identified at the BBC.
With IR35 high on HMRC’s agenda it is more important than ever for individuals using personal service companies to take professional advice.
For further information/advice on this subject area please contact our Corporate Tax Manager, Sarah Brock: sarah.brock@wardwilliams.co.uk
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