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Rumours of 2,000 IR35 enquiries ‘untrue,’ says HMRC

Her Majesty’s Revenue & Customs has accused a leading trade body of ‘exaggerating’ the threat of some 2,000 IR35 investigations since May of this year.

PCG, one of the leading freelance contracting trade bodies, recently stated through an advisor that somewhere in the region of 2,000 enquiries into IR35 status have been launched over the past six to seven months. However, one HMRC spokesman has been adamant in refuting the trade body’s claim, calling PCG ‘misinformed’ and stating unequivocally that the 2,000 IR35 enquiry figure is simply incorrect.

The taxman has not seen fit to reveal the exact number of ‘disguised employment’ investigations that have been launched since May, even as re-affirming in the same breath that HMRC is indeed taking steps to increase the number of these investigations in 2012 by a factor of ten, though the tax authority spokesman did say that it would not be inaccurate to expect a figure somewhere ‘in the hundreds’ when it comes down to it in the end.

The plans to increase enforcement of IR35, which ensures that employers are treating employees as freelancers or contractors in order to avoid paying more in National Insurance, had well been laid in the past before several scandals broke earlier this year involving high-profile public figures arranging their salaries to be paid to them through a personal service company in what could be viewed as instances of tax avoidance. HMRC representatives say the commitment to increase enforcement had been resolved well before the likes of Jimmy Carr and his K2 tax avoidance scheme.

“HMRC has not set an optimum level of enquiries,” the Revenue official said. “HMRC resources to risk – if our analysis shows that a risk has increased then we will increase the number of investigations into that area.”

Speaking to CUK last night, an ex-head of investigations for the tax authority said that the department’s resources were one reason why the claim of 2,000 IR35 enquiries since May failed to ring true.

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