The Business Entity Test

What is it?

The BETs have been around for a couple of years now and have largely seen the response from contractors and professionals alike, that they are not too helpful. In a bid to simplify the complicated and often cloudy IR35 legislation, the Revenue introduced the test compromising of 12 points.

The 12 Points:

  1. Business Premises
  2. Professional Indemnity Insurance
  3. Efficiency
  4. Assistance
  5. Advertising
  6. Previous PAYE
  7. Business Plan
  8. Repair at own expense
  9. Client Risk
  10. Billing
  11. Right of Substitution
  12. Actual Substitution

It was intended to help contractors self-assess their IR35 risk. The problem is, contractors wanted a way to self-assess their IR35 status and so the BETs became an almost pointless exercise with many professionals taking the view that the BETs do not take into account individual’s situations, the weighting of the scoring system does not balance relative to the importance of the tests nor does it assess the written contract or some of the main tests determined by historic case law which are used to assess one’s status. This leads the majority of genuine contractors in the medium to high risk category.

As a result, many contractors are left taking the test, and not knowing what to do with the result. The only saving grace is that should you fall in the low risk category, you will be spared an investigation for at least 3 years, but only if you can satisfactorily prove it.

If you are confused about IR35, we at QAccounting, aim to support contractors and provide advice on IR35 status, so get in touch today to learn about our IR35 accounting services.