One of the first HMRC checks to have been successfully closed down after the introduction of the off-payroll working rules is proof that these much-feared changes are manageable, particularly when the tax office takes a pragmatic approach to IR35 compliance.
The IR35 check, involving a global organisation engaging over 300 contractors, was successfully shut down with the support of specialist, Qdos, which described it as a “turning point” in making all businesses aware that contractors can be safely engaged outside the scope of the IR35 legislation.
The business, which has requested to remain anonymous, received a letter from HMRC in September 2021 containing numerous questions relating to the processes in place to ensure IR35 compliance under the off-payroll working rules – from how IR35 status is determined to how many contractors are engaged inside and outside of the legislation.
Following a rigorous review of the business’s IR35 compliance and with HMRC having been presented with the details of a robust compliance framework – achieved through Qdos’ Status Review facility – the tax office closed down this 18-month probe earlier this month.
Seb Maley, Qdos CEO, commented: “There has been so much concern surrounding the off-payroll working rules in recent years – to the point where businesses have forced contractors inside IR35 or stopped engaging them altogether for fear of falling foul of this complex legislation.
“Above all else, the successful closure of this IR35 check – where the majority of contractors were engaged outside IR35 – is proof that the off-payroll working rules can in fact be managed. For risk-averse businesses, this should be a turning point.
“The business subject to this IR35 enquiry provides the perfect blueprint for ensuring IR35 compliance. Along with having engaged an expert to carry out IR35 status determinations, a clear and comprehensive audit trail proved vital in evidencing compliance to HMRC.
“When it comes to IR35, in the past HMRC has been guilty of jumping to conclusions, accusing parties of non-compliance before having established the facts. The tax office’s pragmatic approach to this check was refreshing. Long may it continue.”