IR35 investigations double and tax yield up five times

[escapeUK]

A recent Freedom of Information request made by Bloomsbury Professional, the business publishers, has revealed that IR35 investigations more than doubled in the last tax year from 23 (2010/11) to 59 (2011/12). Tax yield from IR35 enquiries has also increased from £219,180 in 2010/11 to £1.25 million in 2011/12.

Still very small numbers, and no number of successful investigations.

[tractor]

Perhaps we should be grateful that they are actually targetting those most at risk of being inside IR35 more accurately. That would explain the better returns.

As for "by claiming that they simply do not compile or retain statistics on the tax take for those caught", they had the figures all along; PCG published them a while back. But they were so pathetic compared to the forecast £900m a year, no wonder they didn't want to tell people the truth...

I agree, that's why I said 'claiming'. They are bigger liars, more incompetent and greedier than bankers.

[malvolio]

Perhaps we should be grateful that they are actually targetting those most at risk of being inside IR35 more accurately. That would explain the better returns.

As for "by claiming that they simply do not compile or retain statistics on the tax take for those caught", they had the figures all along; PCG published them a while back. But they were so pathetic compared to the forecast £900m a year, no wonder they didn't want to tell people the truth...

[northernladuk]

You're right the deterrent affect might end up playing a significant role here. It could be that a significant number of contractors simply declare themselves inside IR35. That in itself would be success.

I think the days of surviving by being a Gnu in a big herd are over.

I just hope they go for the gnu's first for easy and rich pickings and leave the rest of us that try to understand what we do properly alone... but that won't happen. They could pick 80% of the contractors at my current gig who don't know or don't care what IR35 amongst other failings but I bet I know who will get their collar felt first

[tractor]

....

You're right the deterrent affect might end up playing a significant role here. It could be that a significant number of contractors simply declare themselves inside IR35. That in itself would be success.

I think the days of surviving by being a Gnu in a big herd are over.

This is precisely why the Tories backtracked on their hints in opposition that they would abolish IR35. When HMRC made them realise that it would open the floodgates and they would start to lose significantly more, they backed off.

What makes me laugh about these claims are that for a decade, HMRC have refused to justify or prove the success or otherwise of IR35 by claiming that they simply do not compile or retain statistics on the tax take for those caught. Now they have some public backing for it, they are claiming 5 times the success? How can they possibly know unless they are the biggest liars.....oh wait.....

[BlasterBates]

You're right the deterrent affect might end up playing a significant role here. It could be that a significant number of contractors simply declare themselves inside IR35. That in itself would be success.

I think the days of surviving by being a Gnu in a big herd are over.

[Jessica@WhiteFieldTax]

We're only seeing part of the picture with these stats.

The missing element is the deterrent - how many contactors have decided not to take the risk and declare themselves inside IR35 anyway?

The figures are surprisingly low; with speclaist teams coming together its hard to see how they can't improve on those resulsts. Ramp up to say 2000 cases a year, just those working for the big agencies on standard contracts, aim for the low hanging fruit, 10% will capitulate pretty quickly, 200 cases settled quite easily.

For a professional contractor with their wits about them, the ultilmate risk of a fail is still the same, but the lazy ones will be at risk.

[BlasterBates]

hmm that's a point may well have been longterm which was why they investigated in the first place.

But a good point ...concurrent contracts.

[captainham]

It only says that those contracts were concurrent, and not necessarily shorter ones (which are more likely to have HMRC losing interest).

Although it must definitely help having more than one on the boil at any time though.

[BlasterBates]

This is worth reading:

Shout99 : IR35 'investigation' ends in three weeks

Our client had a strong case with multiple concurrent contracts with some work being undertaken from his home office. He has been contracting since before IR35 was introduced. Like us he is delighted with the result and how quickly this was resolved.

I think if you're one these contractors that loafs around on long contracts I would take it seriously.

[BlasterBates]

Their success rate compared to 2002/2003 is extremely good, to get that amount they must be winning most of their cases. They're earning more from 20 or 30 cases than they were from over 1000.

Need to keep an eye on their ramp up...at the moment it is very low. 59 cases, however if they ramp up to 1000 like they did in the early 2000's it would become a significant problem.

[captainham]

Interesting stats here, halfway down the page:

Shout99 : IR35 investigations double and tax yield up five times

HMRC have really taken their foot off the IR35 pedal in recent years, it seems, although of course they're cranking it back up again now.