Last week was a first for Primat Recruitment, pushing boundaries to host a virtual Q&A session for contractors.
Contractors across the country asked questions on employment tax in a live chat room and panellists Dave Cooper (who’s divided his 30 years of tax experience between being an Inspector of Taxes and part of the ‘Big 4’), Brian Ackerley (who’s 20 years of accountancy experience includes a lengthy stint at the Inland Revenue) and Primat’s Business Assurance Team Leader Elliot Johnson (the longest serving team member, managing the candidate care function) shared expert advice in real-time.
Click here to view or print the Q&A session in full but, for now, check out some highlights below:
In a flash poll, more than half of the attendees admitted they were fairly concerned about being challenged by HMRC on IR35 matters....
Q: Can you tell me what HMRC's current practical approach to IR35 compliance is?
A: HMRC is piloting an approach with three key elements, including its Business Entity Tests (to determine risk), Contract Reviews (to provide an ‘opinion’ on whether in/out of IR35), and new Compliance approach (using specialist teams for undertaking reviews).
A massive 77% of the event audience weren’t aware of the details of HMRC’s Business Entity Tests...
Q: If I take the Business Entity Tests, would HMRC be ‘listening in’ or am I obliged to declare the outcome in my accounts or tax returns?
A: The Business Entity Tests undertaken personally are confidential. You do not have to take them nor inform HMRC of the results. They’re intended to indicate your company’s risk of review by HMRC, rather than to definitively tell you whether or not you are within IR35. Some of the most relevant tests of employment status (i.e. which have been established by case law as important) are not included within the Business Entity Tests.
Q: Is it helpful to terminate your contract when you go on vacation (say for two weeks) and start with a fresh contract after the vacation?
A: Any break in providing services under an ongoing relationship would be helpful and could then be acknowledged by the termination of one contract and the commencement of a new one. There are, of course, the practicalities to be considered. Our suggestion would be to liaise with your Candidate Care Consultant so that any such process can be handled effectively.
Q: How are cases selected by HMRC for review?
A: There are a number of ways HMRC can identify potential cases for review, from year end returns (e.g. Self Assessment, PAYE P35/RTI returns ) but the department also uses risk profiling processing to choose the most likely businesses to target (e.g. identifying ‘unusual’ or late returns). Business Entity Tests do, of course, from part of this risk profiling assessment, though often HMRC cannot accurately apply these Tests without approaching the contractor.
Polls during the event emphasised its popularity, with almost half of visitors requesting more similar online sessions. Watch this space for the next event!