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HMRC has massive gaps in its IR35 information

In yet another prime example that one hand of the Government doesn’t know what the other is doing, HMRC admits it has no idea what it’s doing with IR35.

Well that might be a bit facetious on my part, but it’s not too far from the truth: it turns out that the taxman isn’t in possession of some serious bits of information in regards to the disguised employment rule, according to a recently made Freedom of Information request. In particular, HMRC said that it doesn’t have any information about several rather important bits of info, including how much it’s been costing to investigate IR35 cases since 2001, shortly after the rule was put in place.

It’s worse than that, too: the tax authority also admitted that it’s simply got no idea how many of those investigated immediately paid up or whether they paid their tax debts off over time, the number of times that property was seized in order to settle these debts, or even who ended up being identified under IR35 as possible investigation targets. Can you believe it? There’s literally no record of who HMRC was looking at when it comes to possible disguised employment culprits!

The only thing the taxman was able to provide was how many reviews were opened for the first 11 years of the rule, from 2000 to 2011. However, it declined to divulge any more recent information under a provision built into the Freedom of Information Act. Your guess is as good as mine as for how long it will be until HMRC conveniently ‘misplaces’ or ‘forgets’ this new information, though.

Isn’t it just like the Government to completely bollocks this up? I mean how can we trust a public entity to keep track of our tax obligations if they can’t even keep their own internal database in order? How hard is it truly to keep records of all this information, especially when it’s supposedly so damned important to know who’s possibly getting one over on HMRC by using their status as a contractor to erroneously avoid paying higher levels of tax? The only thing I can think of is that if HMRC isn’t going to treat IR35 with the seriousness that it keeps saying it does, why should we as taxpayers treat it any less flippantly?

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