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10th November 2011
IR35 shows growth in average yield
The average yield on IR35 cases has been found to have increased substantially over the course of the past five years.
In fact, a recent Freedom of Information (FIO) request found that the average IR35 yield rose by 100 per cent in the five years to 2011. In the five years to 2006, HM Revenue and Customs (HMRC) achieved an average yield of £1,700 per case, while the five years to 2011 generated an average of £17,000 per case.
The PCG, the not-for-profit association for UK freelancers which was behind the FOI request, suggested that the tax authorities have revised their approach to IR35 to ensure it acts as more of a deterrent.
Further details were also revealed in the request, such as the fact that in the five years to 2006, 3,886 IR35 investigations yielded around £6.7 million. In the same time period to 2011, just 332 cases generated £5.4 million.
However, it is worth noting that there is further information missing regarding this area of tax. For example, it was not possible to include what was recovered by HMRC in employment taxes paid by umbrella companies that apply PAYE under IR35.
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