In keeping with its promise to improve HMRC administration of IR35 regulations, the Government plans to set up dedicated helplines throughout the UK and staffed by specialist advisers.
Exchequer Secretary David Gauke and Office of Tax Simplification Director John Whiting were joint signatories to a letter to the OTS Chairman, Michael Jack, confirming that immediate abolition of IR35 was now off the government’s agenda, as indeed was the introduction of a new business test to assess whether or not individuals should be classified as self-employed.
As is well known amongst the UK’s contracting community, IR35 legislation has been dogged by sustained criticism for its lack of clarity over the issue of self-employment. Many freelancers consider it excessively punitive and fatally ambiguous, so the government’s decision to retain it has not passed without some considerable controversy. However, Chancellor George Osborne has insisted that the administration of the notorious regulations by HMRC will be substantially improved, and the dedicated helplines appear to be a clear step in this direction.
The letter makes clear that the helplines are actually part of a series of measures designed to improve IR35 administration. Others include the publication of new guidance on the type of cases HMRC consider beyond the scope of IR35, restricting reviews to high-risk cases in order to promote a more tightly targeted approach to compliance activity, and the continuing monitoring of HMRC’s new approach by the newly created IR35 Forum.
Mr Gauke explained that the option of a new business test was discarded because, after due consideration, it was felt to be too challenging to devise in such a way that it would work for both business and HMRC.