Freelance World has conducted research into high street accountancy knowledge of contractor legislation and the results are worrying.
The survey was based on twelve individual accountancy firms. The majority of them were offering contractors a ‘targeted solution’ without the knowledge that this is forbidden under the MSC legislation.
The IR35 tax rule has been in existence since 1998. Contractors are subject to IR35 which taxes freelance workers as employees. Freelance World declared that the firm they surveyed had a “lack of detailed knowledge” and “worryingly vague knowledge” regarding compliance.” One firm in particular said that contractors “didn’t need to worry about it” while another said the rule had “died a death”.
Managing director of Freelance World, Alasdair McGill, commented: “What these firms should be telling their prospective clients is that IR35 work should be handled by an employment law specialist…, not telling them that it is nothing to worry about.”
He continued, “Accountants should not be issuing advice on IR35 unless they have real experience of employment status and are confident about defending their clients in front of the tax tribunals.”
Mr McGill drove home the message of how crucial the right tax advice is for contractors. Failure to comply with the relevant tax legislation could result in future credit problems due to HMRC blacklisting.
A representative from HMRC admitted that advice given to freelancers “sometimes presents a too simplistic picture of whether the Intermediaries legislation applies or not”.
Freelance World concluded, “It is quite clear that many high street accountancy firms simply do not have the expertise to advise contractors on key legislation, compliance and management of their specific requirements.”