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HMRC finally updates IR35 compliance guidance

It’s been a long time coming, but it’s finally here: contractors rejoice, for Her Majesty’s Revenue & Customs has updated new guidance on IR35 compliance.

Prior to this massive update – a full 19 pages to be exact – a contractor’s only hope to glean some insider knowledge into IR35 was a rather anaemic Frequently Asked Questions section. It typically left people more confused than they were before they encountered the information, but this is now thankfully very much a thing of the past.

I have to be completely honest here: I didn’t know the tax authority could actually pull this off successfully. I’ve been a bit of a critic of some of HMRC’s decisions as of late but I’m standing here, hat in hand, and begging the taxman’s pardon. Not only that I’m deeply grateful that the guidance is so detailed. There are six separate sections, developed with the input of the IR35 Forum, and covers everything from HMRC enquiries to just exactly how intermediaries legislation affects the average contractor, if at all.

Now is this new guidance perfect? Of course not – nothing is. If I were to tell you it were I’d be a liar. But it’s absolutely a massive step in the right direction, especially since it helps sweep a bit of a path through the minefield that IR35 compliance has become. With the recent changes to disguised employment legislation, especially when it comes to personal service companies, this guidance update was sorely needed as a way to clear the already muddied waters.

For what it’s worth, IR35 has never been the perfect option for rooting out tax avoidance schemes, but it’s an important tool that has at least been refined over the past few years with an eye to not just maximise the Treasury’s returns but also to keep those Brits who legitimately are self-employed safe and out of the reach of a piece of regulatory language that’s specifically designed to catch people who try to game the system. I’m all for more honesty in tax collection, on both sides of the arrangement. Now, if we can only suss out a way to get these blasted multinational companies to stop using incredibly complex money laundering schemes to avoid paying corporation tax, I’ll be deliriously happy.

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