HMRC has now published online the minutes of the IR35 Forum’s last two meetings (held on 21st February and 8th March) and the contents confirm that new trial business tests will be applied from April.
PAYE umbrella contractors, of course, don’t need to worry about IR35, but freelancers running their own limited companies have frequently been ensnared by the apparently elastic ways in which the regulations have so far been interpreted by the Revenue. It is by no means without precedent for limited company directors to find themselves accused of practising the dark arts of disguised employment when the are, in fact, acting as legitimate businesses.
The new business tests are designed to put an end to these HMRC-orchestrated shenanigans, which may owe more to cock-up than to conspiracy. A set of typical scenarios will also by published on the Revenue’s website, aimed at assisting contractors to clearly determine the likelihood of their business being caught by IR35.
Originally, the Forum examined 17 typical scenarios. Eventually, agreement was reached between Forum members, the HMRC and external assessors on 14 of them. To minimise the risk of confusion, just six of them will see the light of day online. They include two illustrations of contracts ‘caught’ by IR35, two contracts clearly outside the regulations, one ‘grey’ example, and a final illustration showing how a contract may begin outside the rules but subsequently enter their scope due to alterations in a company’s practices. The scenarios will not be sector specific.
Work is underway right now in the Forum to finalise online publication of the business tests and scenarios in time for the April launch.