Within hours on HMRC publishing its IR35 guidance, members of the IR35 Forum issued a statement saying the document did not take key elements of their advice into consideration.
The IR35 Forum was set up specifically to advise the Revenue and the Treasury on the best way to administer IR35. Members of the panels included APSCo, the FSB, FCSA, PCG and the REC.
The joint statement said the Forum members were concerned that the measures HMRC has suggested do not go far enough to satisfy the new approach promised by the Chancellor in the 2011 Budget.
The Government promised to simplify IR35 and yet the business entity tests represent greater complexity, according to the members.
Chris Bryce, the chairman of the PCG, was also a member of the Forum. He said HMRC’s guidance notes show that it is not committed to improving the administration of IR35. External members of the Forum worked relentlessly to come up with innovative solutions, but the Revenue has gone for a risk averse approach that is unlikely to bring about improvements.
The Forum’s main gripe surrounds the scoring system on the business entity tests. External members said the way HMRC has distributed the points is unfair and does not reflect real-life business situations.
Members believe the scoring system will mean a large number of businesses wrongly fall into the high-risk category. This could turn out to be counter-productive because IR35 compliance officers will struggle to identify genuine high-risk case.
We are now entering what the Revenue calls the ‘test and learn phase’. During the next 12 months, the IR35 Forum will monitor the effect of the newly published measures.
The REC’s head of public policy, Gillian Econopouly, said that despite their disappointment, Forum members would continue to fight for a better solution to the IR35 problem.
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