Take the Business Entity Tests, get 3 years IR35-free

At a recent providers’ meeting, HMRC presented an update on how things are changing in relation to the enforcement of IR35.

What was astonishing was the low number of enquiries previously undertaken, and the length of time they were taking.

The main message? This is unacceptable.

Moving forwards, HMRC has planned to increase the number of enquiries three-fold. It’s also looking to dramatically reduce the length of time each enquiry takes, and asking for reasons to support the worker’s status in the first letter should speed this up.

If evidence such as the Business Entity Tests can be provided to show that the worker is outside of IR35, HMRC has committed to closing an enquiry within eight weeks.

After this, if the decision goes in the worker’s favour, HMRC would commit to not investigating them for another three years.

Well, that’s a get out of jail card if ever I saw one.

If I were a contractor using my own limited company for the past few years, I would take the tests and have their results effectively draw a line under my previous years’ taxes and give myself a three year respite. Happy days…

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