HMRC loses IR35 tribunal case raising concerns over the departments ‘credibility’ regarding the legislation

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HMRC loses IR35 tribunal case raising concerns over the departments 'credibility'

Helen Fospero, who was formerly an ITV presenter and now works as a reporter for Watchdog and The One Show has defeated HM Revenue & Customs (HMRC) tax bill of £80,000 at an IR35 tax tribunal case. People believe this raises concerns regarding the Governmental tax department’s “credibility to oversee compliance with the changes to IR35 in the private sector.”

The Association of Independent Professionals and the Self-Employed (IPSE) questions if HMRC actually understands its own legislation.

Andy Chamberlain, IPSE’s deputy director of policy, said:

HMRC cannot grasp its own legislation, how can it expect businesses across the UK to when it changes IR35 in the private sector next April?

The fact that HMRC has been judged wrong on this – and that it clearly cannot understand its own legislation – fatally undermines its CEST (Check Employment Status for Tax) tool, which freelancers are supposed to be able to use to determine their IR35 status.

It also calls into the question the veracity of HMRC’s advice to public sector organisations about the status of their engagements – and raises concerns about its credibility and authority to oversee compliance in the private sector from next April. How will businesses be able to trust HMRC’s judgement when it continually loses IR35 tribunals?

This is the second IR35 case this week where the contractor has defeated the taxman. Richard Alcock, an IT contractor won his IR35 case against HMRC.

Seb Maley, CEO of Qdos, an insurance and tax advice for the self-employed firm said:

This is another example of HMRC wrongly pursuing a contractor, placing them under enormous financial and emotional stress. Given the tax office’s aggressive nature towards independent workers, contractors need to be confident of their IR35 compliance.

Daniel Fallows, director at Gorilla Accounting, a specialist contractor accountant said:

This latest legal case is further proof that HMRC’s implementation of IR35 is deeply unsatisfactory. The uncertainty and inconsistencies surrounding IR35 are paralysing for the self-employed. Contractors and freelancers need a stable regulatory environment to be able to focus on their work, which contributes so much to the UK economy. However, this is sorely lacking at the moment, and HMRC must reconsider its approach to IR35. In particular, the Check Employment Status for Tax (CEST) tool should immediately be reviewed, as it mistakenly gives the wrong employment status in many cases.

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