REC response to HMRC withdrawal of IR35 Business Entity Tests
In response to the announcement, Tom Hadley, Director of Policy and Professional Services, says, “Through our membership of HMRC’s IR35 Forum, we carried out a joint review of the tests with IPSE and APSCo and found that they were ineffective in giving businesses greater certainty about their risk, and were not always used correctly or consistently. This was particularly evident in the public sector where some departments have inappropriately applied the risk scores or have created their own versions to satisfy guidelines set by the Treasury for off-payroll contractors.
“We must now focus on what happens next. So far, HMRC have only issued a very short statement about the changes. With no plans for a replacement for the tests, we have requested that HMRC ensure that the updated guidance is fit for purpose, easy to find and fully integrated with the relevant tax information on the gov.uk website.
“This message must be communicated back to all government departments and the Treasury should monitor and stamp out any further use or alternative versions of the tests. We will continue to use our place on the IR35 Forum to push these points home on behalf of our members.”