In IR35

A week is a long time in politics, Harold Wilson famously declared; it also appears true of the IR35 Forum, amongst whom unseemly divisions are erupting.

Just a week ago, the Forum appeared united, opposing the new ‘business entity test’ as weighted and selected by HMRC. All parties seemed to endorse PCG Chairman Chris Bryce’s view:

“HMRC’s new guidance demonstrates their fundamental lack of courage and commitment to improve the operation of IR35. While the external members of the Forum have worked tirelessly to develop innovative solutions, HMRC appear at this stage to have opted for a risk averse approach that will not deliver the improvements that are so clearly needed.”

Then Kate Cottrell, an IR35 expert from the employment law specialists Bauer and Cottrell, advised directors of limited companies, potential targets of the regulations, not to panic. Dissenting from the PCG view that the new HMRC test amounted to a major “missed opportunity,” Ms Cottrell said in a statement to industry news source Shout99:

“These tests are a minor part of the administration of IR35 and as the IR35 legislation has not changed, failure to put in place an easy business test cannot be seen in my opinion as a missed opportunity as there was no opportunity.”

In other words, provided contractors running legitimate limited companies carry on as before by keeping up their tax investigation insurance, reviewing their contracts regularly and ensuring professional confirmation of arrangements, they will be fine.

The PCG, for its part, disagrees with Ms Cottrell and considers the test as is stands to be a threat to contracting.

Maybe it is time to start seeking the best PAYE umbrella solution.

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