Contract Review Service helpline rarely used
It was revealed by HMRC at the last IR35 Forum meeting held on 1st August that their Contract Review Service (CRS) helpline is the least used of all the employer helplines. The department preferred to think that this was due to a general lack of awareness of IR35 rather than contractors being suspicious or sceptical about the helpline’s purpose and function.
The CRS helpline, located in Northampton, is currently manned by three experienced status inspectors. Calls to the helpline can take up to 45 minutes or longer, although the average call length is approximately 15 minutes.
During the year ended 31st March 2013 the CRS helpline received 80 requests for opinions as to whether a specific contract was inside or outside of IR35. Of those requests, only 10 written opinions were given, with 70 cases outstanding because of:
| Still working | 7 |
| Phone requests (no contract) | 28 |
| Draft or generic contract | 12 |
| No written contract | 13 |
| No sight of upper level contract | 5 |
| Handed off to a specialist CS team | 1 |
| Request withdrawn | 1 |
| Not an IR35 intermediary | 3 |
The Forum agreed that the profile of IR35 needed to be raised and that there was a need to think creatively about how HMRC delivers the IR35 message. One idea HRMC have is that they should consider targeted communications about IR35 around ‘lifetime events’ such as when an individual forms a limited company for the first time.
A question was raised as to how many companies responded to the Service Company question on the form P35. Whilst HMRC did not have any statistics to answer this they believed it was probably lower than it should be.
All of HMRC’s guidance will be shifting to www.GOV.uk, which will mean that it will need to be revised. At the moment there is no timeframe for when this change will take place.
Office holders
Back in April, HMRC told the IR35 Forum that it was developing additional guidance in the form of Frequently Asked Questions in relation to office holders. This is still a work-in-progress although when the guidance is completed it is intended that it will include some examples.
Enquiry times
Current figures suggest that where satisfactory evidence is presented at the outset, that a contract falls outside of IR35, then HMRC are taking between 1 – 6 weeks to close the enquiry down.
When asked in what cases HMRC would need to contact the end client for information, HMRC explained that this will happen in the majority of high risk cases. Only in very exceptional circumstances will the Revenue not approach the end user in order to check facts.
Public sector
Concerns were raised that a growing number of engagers are asking freelancers if they are low risk by virtue of the Business Entity Tests (BETs), forcing them to operate PAYE/IR35 if that is not the case. HMRC responded with equal concern as they explained that BET’s had never been intended to be used in this way when they were first introduced, but rather as a tool to enable contractor’s to gauge their risk of an IR35 investigation. Also, the Revenue had always made it clear that it was possible for a contractor to be high risk by reference to BETs but still not be caught by IR35.
The PCG felt that the Ministry of Justice (MoJ) had adopted good practice in assessing a contractor’s IR35 status. A contractor sits with a manager and completes a 44-question work practice questionnaire which, in turn, has to be independently checked. If the independent check concludes that the contract falls outside of IR35 then the MoJ accept this view. Some Forum members however felt that this was overly bureaucratic and burdensome.
Whilst HMRC could not discuss this issue, as it is the Treasury’s guidance, they were happy to share the PCG’s view with HM Treasury.
The next meeting of the IR35 Forum is scheduled for 11th November.
[quote]The department preferred to think that this was due to a general lack of awareness of IR35 rather than contractors being suspicious or sceptical about the helpline’s purpose and function.[/quote]
Then they are wrong!
I wonder if the Police setup a free road-side breathalyzer, and drink-drive advice centre, how many drivers would dare/want to visit?
Public Sector – Home Office appear to have taken over from hectoring contractors with a slightly different approach to MoJ.
Sequence of events as follows:
1. (March 2012) Send out letter demanding contractors complete BET. (2 days allowed for return of information and threat “failure to provide response may result in your contract being recommended for termination”) – Home Office version contains basic errors in scoring and variations to HMRC BET Test however score “Low Risk”.
2. (June 2013) Demand for completion of “Working Practices Questionnaire” – Immediate Response required – This I assume is the same as MoJ – No problem with this as showed “Low Risk”
3. (October 2013) Demand for proof of IR35 Status – (1 week allowed to provide “report from HMRC’s helpline or another qualified body” with the added threat of “HM Treasury requires termination of any contract where assurance is not provided”!
OK Revenue, here’s the reason: The unreasonable requirement for half-page written statement from end-client describing how the contract ‘works on the ground’. Took me months of too-ing and fro-ing with my client to try to obtain, with lots of broken promises, and general client disorganisation, before I gave up. Oh and the need for client-agency contract, my agency refused to supply even copy with blacked-out financials. HMRC CRS added these two requirements some years back, before they were not requested. For me, that had rendered the CRS worthless. Cheerio.
They also claim this will not have an adverse effect on contractors avoiding the public sector.
They are wrong !
They also claim there will be no adverse affect on contractors avoiding the public sector.
Wrong Again – why put ourselves on their radar !
At the end of the HRMC knows that all they have to do is find some pompous arse in your client organisation and ask them loaded questions that are designed to inflate their ego, and they will always answer that they are the master, and you but a slave. You must have heard “My team” or “My contractors…”.