The IR35 Police
Who is behind IR35? Let’s take a look at who exactly is charged with enforcing the legislation, and see who is pulling the strings of IR35 enquiries and investigations.
Last year, during April’s IR35 forum meeting, HMRC revealed that they would ‘increase’ and ‘strengthen’ the specialist team of inspectors tasked solely with enforcing the legislation. After this announcement, a fourth team was introduced, who were to be based in Bradford, to complement the existing ones in Croydon, Salford and Edinburgh. This cemented the Revenue’s commitment to IR35, and in a time where many suspected the legislation would decline or even be scrapped completely, showed the contracting world that IR35 was here to stay.
The message was very clear from the meeting itself, HMRC vowed to put more resources into the policing of IR35 going forward. With the promise of a sharp increase in the number of enquiries, HMRC were true to their word, with a high percentage of IR35 enquiries and activity recorded in the latter part of last year.
Even speaking in the recent financial budget, Chancellor George Osborne stated that he was “increasing HMRC’s budget to tackle non-compliance.” Although this wasn’t in direct reference to IR35, this further reiterated the Revenue’s determination to clamp down on tax avoidance.
IR35 Specialist Teams
The IR35 teams themselves are comprised of 12 officers each, who are tasked solely with carrying out IR35 enquiries. As stated previously, these teams are situated in Croydon, Salford, Edinburgh and most recently Bradford.
Each officer could probably undertake around 50 cases in a year, which means we could potentially see close to 2,000 new IR35 inspections annually. Although the Revenue has hinted that we shouldn’t expect the number of enquiries to reach such a high volume, it certainly shows the potential of HMRC’s growing teams of IR35 enforcers.
IR35 itself has been on the rise for some time, with the number enquiries growing for the past five years. With a vast amount of investigations now a tangible possibility, the IR35 specialist teams are a real cause for concern for contractors.