Mythical IR35 Statistics

There appears to be some sort of myth floating around to the effect that only 300 (or is it 200?) IR35 enquiries have been taken up by HM Revenue & Customs, out of which only two people have been brought within the scope of IR35. These figures appear to have originated from a Government answer to a question raised in the House of Commons.

I can assure readers that these statistics are absolute nonsense. Qdos Consulting alone has first-hand knowledge of some 750 IR35 enquiry cases and our claims department have seen a similar number being dealt with by accountants. About 115 of these we have settled in the last 12 months. Please note that these figures do not include Employer Compliance Reviews that have merely the potential to ask questions about tax status. The cases to which I refer are genuine IR35 status enquiries. If we add in the number of cases worked by firms of accountants and other tax consultancies around the country, the real total must run into thousands.

As for cases that the Revenue has won, there must be a lot more than two. Two have been won by the Revenue at appeal hearings supported by the Professional Contractors Group. There must be dozens, perhaps scores or more, of cases that the Revenue has won because the taxpayer concerned has simply accepted the Status Inspector's decision, or has given up after a debate. The Revenue might have had some additional victories at unreported appeal hearings before local bodies of General Commissioners.

The figures provided by the Government might relate to the resolution of contentious IR35 cases. By contentious I mean those that involve the issue of formal status decisions by the Revenue, which are appealed and have the capacity to go to a hearing. In any case, they cannot refer to IR35 enquiries taken up.

To those of you that think you have as much chance of being caught by an IR35 enquiry as being struck by lightning, may I suggest that you at least purchase an umbrella?

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

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Posted 27/06/05

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