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Details about how HMRC handle IR35 cases have emerged, following the department’s restructuring of the compliance work in April, which is proving to be successful, according to officials.
Newly published minutes of the June IR35 forum meeting show cases are dealt with primarily by three teams that include officials experienced at status work.
The teams are located in Croydon, Edinburgh and Manchester, but are not restricted to their local area, allowing for an approach that has seen an increase in the number of reviews taken up by the Revenue. The department has also seen an improved turnaround time for cases, it said.
It confirmed it would state the years to be covered by an IR35 review at the outset, but if compliance issues were subsequently revealed for earlier years, the taxman would consider examining them, in line with general compliance practices.
HMRC added that scrutiny of earlier periods by sometimes be necessary from the beginning of a review if, for example, officials had information pointing to an error.
The Revenue said inconsistencies of working practices in different IR35 offices are minimal since the restructuring, and the introduction of single strategic oversight of the three teams.
There might be a rare occasion in which a regular inspector takes up an IR35 case, but work will be handled in the main by the Croydon, Edinburgh and Manchester specialists.
HMRC have not yet been able to provide analysis of the impact of the new business entity test, but they said they would provide feedback at the next IR35 meeting.
