HMRC has decided to withhold information relating to the status of IR35 enquiries opened during the last tax year, following a request made by a leading contractor site.
Last May, HMRC published its IR35 business entity test, designed to provide participants with a score which is supposed to show the risk they face of being selected for an IR35 investigation.
One year following the release of the entity test, and related measures, Dave Chaplin, founder of contracting site ContractorCalculator, posed a number of questions to HMRC to see if these new measures had made a positive difference to the way IR35 is administered, and “whether the taxman’s activities are yielding a good return on investment.”
IR35 questions posted to HMRC:
1. How many taxpayers/service companies have been sent IR35 enquiry letters over the last tax year?
2. Of those, how many enquiries have been ignored or not acted upon by those who have received them?
3. How many enquiries have been closed because the taxpayer/service company was deemed to be outside IR35 by HMRC?
4. How many were closed because the targets accepted they were inside IR35 and made payments as appropriate?
5. How many enquiries are still active and are undergoing further investigation?
6. How been enquiries are still being pursued by HMRC having been deemed as inside IR35 with demands for extra tax payments being issued?
7. Of those who have been deemed as inside IR35, how much additional tax and NICs has been accrued?
HMRC withholds IR35 data
Responding to Chaplin’s request for information, HMRC declined to provide answers, citing its right to do so under s.22 of the Freedom of Information Act.
HMRC said that it does intend to publish updated IR35 enquiry data, but that “it will do so in its own time and it would be unfair to issue the information and reply to ContractorCalculator’s questions before everyone else.”
Unsurprisingly, Chaplin called HMRC’s decision to withhold data as “unacceptable”, and urged the tax authorities to publish the answers as a matter or urgency.
“Freedom of Information Act or not, we deserve answers to those questions now. It begs an eighth question: what has HMRC got to hide?”