Tax & admin · 4 May 2017

Contractors accuse HMRC of giving incorrect IR35 advice

IR35 advice
HMRC’s online IR35 tool has been criticised for its lack of legal substance
Public sector contractors seeking IR35 advice from HMRC received incorrect information from the tax office’s call centre, according to an organisation representing Britain’s contracted workers.

After seeking IR35 advice and clarity on their working status, PRISM members the non-profit group representing contractors saidadvisors at HMRC misinformed them on their rights totravel and subsistence expenses.

The latest claims are regarding misinformation on their situation as a limited company owner.

New IR35 reforms were introduced this year to ensure contractors working within a public sector organisation paid the equivalent in taxes as a permanent employee performing the same role.

Following an online self-assessment, the organisation then applies taxes to the contractor in the same way as regular workers.

HMRC’s new IR35 rules meant pushing the responsibility for assessment onto the public sector hirer, and many have in turn devolved that to recruitment agencies and the contractors themselves.

Reform has left many contractors confused, particularly regarding the online self-assessment tool provided by HMRC.

Commenting on the allegations from PRISM members, CEO Crawford Temple said the fact HMRC’s own employees had failed to fully grasp new IR35 reforms indicated the system was too complex for contractors to be expected to adapt to.

this is the most recent change to the tax legislation affecting contractors and the mistakes being made by HMRC are causing confusion and further tensions across the market, Temple said in a statement.

this is more evidence, if any were needed, that the whole system of tax and employment legislation is too complicated for people to understand.

if those within HMRC are giving the wrong advice because it is not clear, what chance does a contractor have who just wants to carry out sensible financial planning and get on with the job


 
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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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