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HMRC have announced the end of IR35 compliance checks, only two years after they were introduced.
The abolition of risk-based business entity tests (BETs) will take effect on 6 April 2015, following a review by tax professionals. The IR35 Forum, the Revenue’s external group of advisers on intermediaries legislation, found the voluntary checks – launched in 2012 – were not widely used and were not fulfilling their purpose of assessing whether or not IR35 applied to taxpayer firms.
HMRC have announced the end of IR35 compliance checks, only two years after they were introduced.
The abolition of risk-based business entity tests (BETs) will take effect on 6 April 2015, following a review by tax professionals. The IR35 Forum, the Revenue’s external group of advisers on intermediaries legislation, found the voluntary checks – launched in 2012 – were not widely used and were not fulfilling their purpose of assessing whether or not IR35 applied to taxpayer firms.
BETs will not be taken into account when HMRC open an IR35 enquiry on or after 6 April next year – but the tax department will close an enquiry if it was opened before the withdrawal date and a business can show it took the BETs with an outcome outside IR35 or in the low risk band.
The Revenue will then not open another IR35 enquiry for three years if information provided is accurate and circumstances do not change.
There are no plans to replace the BETs, according to the tax authority, which is set to publish guidance on the tests’ axing.
