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ContractorCalculator’s claims over IR35 online tool needs thorough investigation, says ARC

Responding to recent press reports that the HMRC IR35 online tool, now renamed the Employment Status Service (ESS), is not fit for purpose, Adrian Marlowe (pictured), chair of the Association of Recruitment Consultancies (ARC), said, “When we heard that Contractor Calculator had run the results of 21 Tribunal cases concerned with IR35 and status through the ESS with results that disagreed with the findings in various Court cases, our reaction was that either Contractor Calculator had input the information incorrectly or that the tool is indeed flawed as Contractor Calculator claims. These claims come on top of our own claims of unlawfulness, which is the subject of our lawyers’ recent letter to HMRC. A checklist approach, similar to that used by the ESS, has continuously been rejected by the Law Courts as suitable to determine employment status.

“Given that the Contractor Calculator allegations raise some very serious questions, I would expect HMRC to double check that the tool results are in line with the court findings and then confirm that result. This would provide some kind of assurance. However is it simply good enough for HMRC to say (as they have stated) that “None of these claims is correct. The tool is working correctly and has been extensively tested”? Does their response merely encourage the belief that HMRC will bear no criticism and is set on its path regardless?

“What is being lost here is that the criticism from Contractor Calculator, and the many others including ourselves who have expressed concerns, is intended to be constructive, not destructive, in the interests of achieving a proper and fair solution to the problem that HMRC seeks to address. However both the genesis of the tool, given there was no consultation on whether there should be particular reliance on an online tool in the first place, and now its results, appear to fall significantly short. We believe the IR35 public sector proposition is indelibly unsound.

“Based on the evidence from ContractorCalculator the online tool needs thorough investigation. This makes our request for scrapping Chapter 10 now and a proper review into IR35 over the coming months even more justified.”

Interested parties should contact ARC on A copy of Bindmans’ letter to HMRC is available on request.

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