Although there is no clear cut answer to this, what must be made aware is that the risk of IR35 is ever present for anyone working as a contractor.
In response to this question, Qdos Director Seb Maley stated:
All contractors who are operating through a limited company and paying themselves in dividends are at risk of an IR35 enquiry. The key is to ensure your stall is set out in advance so you can build the best possible defence should HMRC come knocking. Evidence is vital and it’s important that you prove that you have taken due diligence in determining your position at the outset.
What everyone needs to be aware of is that HMRC are putting more resources into the policing of IR35 going forward, and there is an evident increase in the number of enquiries; this is certainly something we have encountered at Qdos. Over the past few months alone, we have had several new enquiries into our clients. A number of IR35 letters have been received in the past few weeks and we’ve been in conversation with a number of other worried contractor accountants whose clients have received similar letters. The letters they have been receiving so far are all very alike, but all of them include references to IR35.
This HMRC letter highlights how easily a contractor can be put on HMRC’s radar, and if responded to without appropriate understanding, would put the contractor at direct risk of an IR35 investigation.
Although it is true that all contractors are at risk of IR35, exactly how a contractor is selected for an enquiry remains a bit of an unknown quantity. HMRC use their rather vague ‘risk assessment criteria’ to profile high risk cases. Nobody actually knows exactly what this entails, but the Revenue do have various sources of information they can draw upon.
Revenue officers also share knowledge, and given that the relatively newly established specialist teams are likely to work closely together, they may also be slightly more intelligent in sharing information. For instance, if an organisation engages multiple contractors and one of them is found to be caught by IR35, HMRC will know that the other contractors are likely to be subject to the same working conditions and therefore may target them as well. There have also been cases of tips offs within businesses, and although this may be something that is rare, it does demonstrate that there is no clear pattern in how contractors are selected.
QAccounting, we work alongside specialist IR35 Accountants so get in touch with one of our experts to learn more about our services.
More Blogs
The Future of Management Accounting
Gone are the days when management accounting simply involved bookkeeping and cost accounting. The business environment has become increasingly complex, and accounting firms and processes must evolve to keep up. But what is the future of management accounting? Read on for our top accounting trends – including the role of technology in accounting.
Understanding the Financials: Accounting for Amazon Sellers
It’s estimated that over 60% of sales on Amazon.com come from third-party sellers rather than directly from the e-commerce giant itself. With such a large captive audience here in the UK, it’s unsurprising that local sellers want a slice of this oversized pie. One thing to bear in mind is the specific set of financial challenges that come with a decision to sell via this platform. If you’re looking to understand more about the ins and outs of accounting for Amazon sellers, read on…
The Role of Accounting in Maximising Charity Impact
Charitable organisations are important for several different reasons. Apart from giving direct help to causes, they also create awareness of certain issues and positively impact society. However, managing finances can be challenging, with many organisations facing unique challenges that are best handled by skilled professionals with experience in accounting for charities. In this blog post, we talk about accountants for charity and the role they play in maximising charitable impact.