IR35 - how many investigations per year?

[malvolio]

Bounce. Time for round 2 surely?

Nah, too easy a target.

[northernladuk]

Why the suicide smiley? It is a reasonable question, not to us maybe as we work this way but to people looking in that don't understand it seems a valid question.

[Pacciae]

Why the suicide smiley? It is a reasonable question, not to us maybe as we work this way but to people looking in that don't understand it seems a valid question.

its not a valid question for a self styled ir 35 expert to make.If these experts dont understand the way we work then they should go back to been counting instead of telling us that working through an agent means we are not really in business. as this is the appropriate response

[Pacciae]

Nah, too easy a target.

Dear Malvolio
As always I am happy to respond to your contentions so please begin your deconstruction and allow me to reply.
Kate Cottrell

Well Malvolio; jump to it by responding to this humble request! looking forward to round 2 even though it would be a really easy target

[JohnAbroad]

There's a bit more information here on the number of IR35 investigations and yesterday's update gives Kate Cottrell's take on why IR35 remains a deterrent - and it's this, rather than the investigation numbers, that she believes means IR35 is here to stay.

IR35 certainly was a deterrent for me, especially the retrospective application of it. The UK market was looking weaker for me work wise at the time, and the prospect of a thumping retrospective tax bill, pushed things over the edge and I decided to contract abroad. I guessed that shutting down the company made it less likely to be investigated.

[malvolio]

Dear Malvolio

As always I am happy to respond to your contentions so please begin your deconstruction and allow me to reply.
Kate Cottrell

Well Malvolio; jump to it by responding to this humble request! looking forward to round 2 even though it would be a really easy target

The problem is that both ours and Kate's positions are supportable. We believe that IR35 is an iniquitous piece of spite engendered by a dim Socialist politician with no knowledge of the reality. Kate takes the line that many "contractors" are nothing of the kind and are are pretending to be such simply to get a tax advantage, so there is a valid case for retaining IR35 as a deterrent to that behaviour.

My argument is, of course, that if you wish to deter disguised employment (assuming it exists and needs to be deterred as a net tax loss generator, which is highly arguable anyway: contractors do generate wealth and assocaited tax payments via both CT and VAT), then you first define what constitutes disguised employment and then legislate against it. IR35 is the worst possible weapon for that purpose. if only because it is so badly drafted as to be practically unworkable. And widely ignored, come to that; most of us treat it with the same contempt as cyclists do the "don't ride on the pavement" law.

There is also the point that while IR35 at best brings in £400m a year or so from all sources, including those who have no need t be paying it anyway, there are several billions a year being lost by more adventurous routes, such as having your company owned by your Monaco-resident wife, or claiming your company pays enough taxes that your personal income should be exempt.

In the absence of fresh, definitive legislation, my own suggestion on the disguised employment score is that IR35 applies if your current client is demonstrably the same organisation as your immediately previous employer sine die and regardless of role, but that seems far too sensible.

Kate's only other potential problem is that she is primarily a taxation expert, is deeply invovled with IR35, was formerly a senior presence in HMRC and naturally understands their point of view in great depth.

The snag is that if your only tool is a hammer, everything looks like a nail.

[simondolan]

Hi all - its been a long time!

For what its worth we've not had a single IR35 enquiry in the last 3 years - that's over a base of around 13000 companies we've acted for during that period. Be interesting if the other accountants on here have similar experiences?

[Alan @ BroomeAffinity]

In 3 years we've never had an IR35 status enquiry. Granted, we've a slightly smaller client base than Simon but its still 0%.

[Martin at NixonWilliams]

I'd agree, all quiet on the IR35 enquiry front here too.

[Steven@Parasol]

I'd agree, all quiet on the IR35 enquiry front here too.

yes, same situation for us.

Is this because everyone knows the rules and what we are dealing with now? And if so, does the panel think this is an argument for keeping the legislation in its current form?