HMRC has forecast that by March 2013 it will have 230 ongoing and resolved IR35 cases investigating contractors under the risk-based approach and business entity tests introduced in May 2012.
The latest IR35 Forum minutes of the meeting on 22 January 2013 also show the degree of concern expressed by non-HMRC members about the office holder amendment to IR35. These remained largely unanswered as the HMRC expert was unavailable.
Also unanswered was a question of crucial importance to limited company contractors: whether HMRC’s Real Time Initiative (RTI) for Pay As You Earn (PAYE) income tax should include dividend payments. Previous minutes recorded that: “HMRC agreed to provide written advice on the point after the meeting.” But in January the taxman admitted that this had been “overlooked”.
HMRC dodged yet another previous question about providing feedback on the business entity tests. It simply said: “There was some question as to whether this data is available and [we] will check this and come back to the forum at a later date.”
However, an HMRC-authored paper had been circulated to Forum members prior to the January meeting, which “summarised the new compliance approach and performance to date”. This highlighted:
“Points to note were that the three new teams created had made good progress, increasing the number of cases and were on target to increase coverage to the [approximately] 230 cases to which it had publicly committed by March 2013.”
The document has not yet been made publicly available, although HMRC committed to providing data on the usage of the business entity tests and its contract review service.
The focus on public sector contracting, which gained so much media attention during 2012, was raised, with forum members asking HMRC if data on public sector enquiries could be made available. HMRC said it would “report results from enquiries into those engaged by the public and private sector separately”.
Contractors’ interests at this meeting were represented by Simon McVicker and Chris Bryce of PCG, and contractor service providers’ by the Freelancer and Contractor Services Association’s Carl Henning.