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Will status changes as a result of the public-sector guidelines incur an IR35 enquiry?

Q.  I’ve been contracting to my public-sector client for a number of years and they’ve just deemed me to be inside IR35 under the new intermediaries legislation. There are two agencies between myself and my client. I agreed to work until 31st March and was assured payment by 5th April but unfortunately the agency closest to me missed this and so the money is due to be paid after 6th April and so will be subject to PAYE/NIC deductions. This will be reported to HMRC via their RTI system and so it will be clear that I have been working for years “outside IR35” and now have been deemed inside for the same contract.

What would be my preferred course of action given I do not want to raise the possibility of an IR35 enquiry which is why I arranged for final payment to be made before 6th April. The agency has currently paused paying my final invoice while options are considered.

A.  This is unlikely to raise an IR35 enquiry. In our opinion it isn’t HMRC’s intention to undertake enquiries into contractors who had previously declared themselves outside of IR35. There will be many contractors in this position and HMRC simply do not have the resources to undertake IR35 enquiries into every contractor, where their status changes as a result of the public-sector guidelines.

By Contractor Doctor

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1 thought on “Will status changes as a result of the public-sector guidelines incur an IR35 enquiry?”

  1. bolshie

    Hahaha! Are you guys for real!? People like the OP are the easiest targets for an under resourced HMRC to investigate! They were doing the same job with the same PSB on the same contract pre April 6th as they are now, deemed inside post April 6th.

    What more evidence do HMRC need and anyway, half the investigation is done for them with the contractor deemed inside.

    The OP and other slike him should be VERY worried.

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