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Give IR35 tests a chance says OTS tax director

Give IR35 tests a chance says OTS tax director

There has been a lot of angry reaction to the new IR35 business entity tests ever since they appeared on HMRC’s website last Wednesday.

John Whiting, the tax director at the Office of Tax Simplification, has now urged taxpayers to give them a chance. He welcomed the fact that they were drawn up in collaboration with members of the IR35 Forum and said it was important for the Forum to monitor the results of the pilot scheme in order to make an informed decision on whether the system should be abolished or retained.

Kate Cottrell, a member of the Forum, agreed with Whiting saying the tests have been blown out of proportion. They only play a minor part in the improvements HMRC is making to IR35 administration. She did however say the tests add further complexity to IR35, and that is not helpful.

In addition to the tests, HMRC is setting up three specialist teams based in Croydon, Edinburgh and Salford. When these teams select a case to investigate, they will take into consideration the reasons why a contractor feels they are outwith the scope of IR35.

The Revenue is also increasing the size of its helpline and review service, which will be staffed by employees that specialise in IR35.

These moves are likely to lead to more IR35 investigations but HMRC argues that the risk assessment tests should mean that the majority of contractors get their tax affairs in order and only those who abuse the system will be investigated.

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