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Business Entity Tests need to go, IR35 Forum urges

If there’s one thing the IR35 Forum hates, it’s Business Entity Tests – and the Forum would like to see them gone completely if possible.

BETs are likely being used improperly by the public sector, the IR35 Forum feels, and it’s tired of having to explain to the public sector that it’s using these BETs the wrong way to establish whether or not a contractor is employed. Truth be told IR35 is a thorn in the side of everyone, but these BETs have not been making it much easier for anyone if you ask me, so I’m glad to see the IR35 Forum is interested in seeing these things dismantled permanently.

BETs really aren’t all that new, as Her Majesty’s Revenue & Customs just introduced back in 2012. The intention behind the tests – to make it easier for freelancers and contractors to determine if they fall under risk for an IR35 investigation – might have been to make things more streamlined when it comes to paying taxes, but the truth of the matter is that BETs have been source of controversy since shortly after they were implemented by the taxman.

HMRC was quick to say that BETs shouldn’t be used to determine employment status. That determination, it said, should be based solely on their actual methods of work, but there do seem to be organisations out there that are using BETs incorrectly in this manner – and it’s gotten the IR35 Forum so hopping mad that it’s called for the abolition of the practice completely!

Now I’m sure the majority of freelancers and contract workers out there in the UK are in agreement with the IR35 Forum, especially those who have spent time struggling with public sector contracts. It’s not necessarily a question of trying to shirk tax responsibilities, either; I know that I would welcome something else instead of the BET to determine IR35 susceptibility if it was more thorough and straightforward – and there were some safeguards in place to prevent employers from using it to determine employment status.

Will the taxman actually go ahead and change things for the better? Well maybe so, maybe no; as far as organisations go it’s largely immune to criticism or at least stubbornly resistant to it. Here’s hoping this changes sometime soon and we can put the BET to rest where it belongs!

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