HMRC have been investigating companies, and opening compliance checks, to establish whether the off-payroll working legislation has been implemented correctly or if there are any taxes due to misclassification of the status of workers.
This article highlights the key questions to ask any Stress Test provider so that you can appoint them with confidence.
The meaningless “Soft landing.”
The so-called “soft landing” has finished, but it was meaningless and only sought to generate moral hazard in the industry. Unfortunately, the non-statutory promise of “no penalties in the first year” was misunderstood by some who thought it meant “no tax bills if you get it wrong.”
Our CEO, Dave Chaplin, led the Stop the off-payroll campaign, which resulted in him sitting around the table with the then Financial Secretary of the Treasury, Jesse Norman. The only generous concession from the minimal review was to make off-payroll only apply to work done after 1st April 2021. When it comes to the “soft landing”, it still means the tax was due but they would waive additional penalties (which are somewhat rare anyway).
People experienced in IR35 Stress Testing are rare
In the modern era, since the tax tribunals were overhauled and the First-tier and Upper-tier tribunals were introduced, there have only been 24 IR35 cases. This period includes a break of five years from 2011 to 2016 when no cases were heard. The most recent cases and others working through the tribunal system are media-based cases. This small number of cases is why few people have the relevant expertise you need.
Accountancy firms are very rarely involved because they do not have the specialist expertise to deal with IR35 cases nor sit on the panels of the insurance underwriters who make the intelligent choices about who to help them defend cases.
When the HMRC wolf finally knocks at the door, the heavy-lifting of tax defence work is completed by the specialist defence and resolution experts, not accountants – their expertise sits elsewhere. Remember that HMRC takes 3-5 years to train their inspectors on status matters.
Picking a Stress Testing provider
Questions to ask any provider offering Stress Testing (our word) or similar pre-emptive process checking services:
- Does the provider have any experience defending an actual IR35 case at a tax tribunal?
- Does the provider have any experience appealing any tax before a tax tribunal?
- Does the provider have any experience attending and watching an IR35 tax tribunal in full, not just reading the highlights?
- Does the provider have any direct experience or contacts with the current IR35 cases going through the tax tribunals?
- Does the provider know how HMRC form opinions during IR35 investigations?
- Does the provider have access to, and understand, the current HMRC policy arguments used in current cases?
Anyone not currently involved in the heat of the current IR35 battles heading towards the tax tribunals will not have the expertise and experience to guide you on setting up a pre-emptive tax defence.
IR35 Shield - Our defence pedigree
At IR35 Shield, our CEO Dave Chaplin has worked alongside Chris Leslie at Tax Networks for many years, including successfully appealing the RALC Consulting case at the First-tier tax tribunal.
They are currently jointly defending many cases in the media and have intimate knowledge of cases they are not directly defending themselves. They have attended and watched almost every IR35 case since HMRC came back on the attack with the Christa Ackroyd case in February 2017.
We, therefore, have historical and contemporary experience on the front line of IR35 enquiry work and tax tribunals. This front-line defence experience is essential for you if you seek help in shoring up your pre-emptive defence.
Dave’s network in the IR35 space is also vast, alongside his knowledge of the case law and over 20 years of championing the flexible workforce via ContractorCalculator.co.uk. Chris Leslie was at HMRC for 20 years, knows how HMRC think and operates, led investigation teams himself, and now leverages his unrivalled expertise to assist companies in status matters.
Together they provide unrivalled knowledge as part of a Stress Testing service delivered via IR35 Shield.
To find out more about the Stress Test service we offer, book a chat on our website or if you are a current client of ours please contact your account manager.
