Qdos Tax Department Settles Over 170 Tax Enquiry Cases

During the last 12 months the Qdos Consulting's Tax Department has settled over 170 tax enquiry cases on behalf of clients. This represents huge savings for our clients, not only in terms of tax.

The great majority of the cases settled were related to IR35 and other issues arising from Inland Revenue Employer Compliance Reviews. This was to be expected. Qdos Consulting has gained an unrivalled reputation for defending freelancers in IR35 disputes, and many of our clients have purchased insurance to cover them specifically for IR35 and other Employer Compliance Review problems. But this is not the whole story.

Although Qdos Consulting are acknowledged experts on IR35, we have also successfully defended non-IR35 status cases in various trades and professions, including one bitter dispute arising from a National Minimum Wage investigation. Other cases settled have concerned Inland Revenue investigations into Company and Personal Tax Returns, and enquiries under the Settlements Legislation.

The savings are easiest to calculate in status cases, because the outcome is nearly always straightforward. There is usually no middle ground - the worker or group of workers concerned is judged to be either employed or self-employed for tax purposes. If the argument is lost, the Status Inspector will require payment of additional liabilities in respect of PAYE Income Tax and National Insurance Contributions, interest, and possibly penalties, normally for up to six years.

As far as IR35 is concerned, the legislation has now been in force for five years, so there is potentially a lot of money at risk. Qdos Consulting's Tax Director, Steve Greenwell, has calculated that the average saving in an IR35 case, in terms of tax, interest and penalties, is approaching £20,000. But this is only an average figure - the longer a contractor has been in business, the higher the stakes.

However, we must not forget the other savings, in terms of professional fees - not to mention the stress and uncertainty. Over 80% of the tax cases settled in the last year have been for insured clients. The insurance policy may be purchased from the Contractors Unlimited website. Growing numbers of freelancer services and accountants across the UK are availing themselves of Tax Enquiry Insurance scheme, and our Claims Department has had to recruit new staff to cope with the increasing amount of claims.

There is still a great deal of uncertainty. Whilst there is no sign of IR35 being abolished, there is still no outcome of the Settlements Legislation test case currently before the High Court. The Inland Revenue is concentrating its attention on status matters in the Construction Industry and other trades. A number of Tax Return enquiries are selected at random, so it is impossible to arrange one's affairs to be sure of never being the subject of a tax enquiry. The impending amalgamation of the Inland Revenue with Customs & Excise is expected to bring about important changes in the manner in which enquiries are conducted, and possibly in the legislative powers underlying tax compliance work.

Whatever the coming 12 months brings, Qdos Consulting will be aiming to repeat the successes of the past, drawing upon the quality of our products and the increasing experience and skill base of our consultants.

Article by Keith Preece - Senior Tax Consultant, Qdos Consulting Limited

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Qdos Freelance Tax Protection gives you total fee protection affording you peace of mind in the event of a PAYE compliance vist, IR35 dispute or Tax Return Enquiry, as your case will be handled by one of our team of tax specialists at Qdos from PAYE compliance review by the Inland Revenue through to Commissioners' Hearing, if required.

Qdos TLC35 - Only £325 incl IPT
Qdos TLC35 not only is cover provided for representation costs, but also for additional tax, NIC, interest and penalties arising from an Inland Revenue enquiry.

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Posted 20/04/05

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