One of HMRC’s first checks to close successfully after the introduction of off-payroll business rules is evidence that these much-feared changes can be controlled, particularly when the tax office takes a pragmatic approach to IR35 compliance.
IR35 screening, which includes a global organization of more than 300 contractors, has been successfully closed with the support of specialist, Qdos, who described it as a “turning point” in making all companies aware of the possibility of safely engaging contractors outside the scope of IR35 legislation.
The company, which asked not to be identified, received a letter from HMRC in September 2021 containing several questions regarding the processes in place to ensure compliance with IR35 under rules working outside the payroll system — ranging from how IR35 status is determined to how many contractors it operates in and out of legislation.
After a rigorous IR35 business compliance review and with HMRC providing details of a robust compliance framework – achieved through Qdos’ case review facility – the tax office closed this 18-month investigation earlier this month.
Qdos CEO Seb Malli commented: “There has been a lot of concern surrounding non-salary work rules in recent years – to the point where companies have forced contractors within IR35 or stopped engaging them altogether for fear of being caught in the wrong by such complex legislation.
“Above all, the successful closing of this IR35 check – as the majority of contractors were operating outside of IR35 – is evidence that out-of-payroll business rules can in fact be managed. For risk-averse companies, this should be a turning point.
“The work subject to this IR35 inquiry provides an ideal blueprint for ensuring compliance with IR35. Along with engaging an expert to implement IR35 case decisions, a clear and comprehensive audit trail has proven vital in establishing compliance with HMRC.
“When it comes to IR35, HMRC has been guilty in the past of jumping to conclusions, accusing parties of non-compliance before the facts are established. The Tax Office’s hands-on approach to this check was refreshing. May it last.”