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1st June 2011
HMRC eager to simplify IR35
According to the minutes from the first dedicated IR35 forum, which took place on 6 May, HMRC wants to see a new approach that has the “specific needs” of contractors in mind.
Although it noted that statutory changes to the current IR35 legislation were beyond its power, it added that it would like to restrict reviews to “high risk” cases and would also strive to simplify the administration of the regulations.
The news that HMRC seems to be open to relaxing the rules and restricting the reviews to high risk cases will be welcomed by contractors working through umbrella companies or though limited companies.
The minutes show that HMRC stated, “It is proposed that this be in line with its [HMRC’s] general approach to risk-based compliance. The spokesperson added that it should, but it should also “Respond to the specific needs of customers within the ambit of IR35.”
HMRC also added that it would not be keen to offer an amnesty to contractors who are not putting themselves under the IR35 category. It explained that it has no way of knowing the number of contractors who are not claiming at the moment and should be, and therefore contractors are unlikely to come forward.
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