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IR35 peace of mind costs less than a round of drinks - Contractor ...

IR35 peace of mind costs less than a round of drinks - Contractor ...

IR35 peace of mind costs less than a round of drinks - Contractor

IR35 peace of mind costs less than a round of drinksWould you consider IR35 peace of mind for less than the cost of a round of drinks a month, or wouldyou rather stick your head in the sand? Because it seems that HMRC is again coming after thecontracting sector, using poorly constructed IR35 risk assessment tools that will catch a lot of genuine contractors in its net. So it’s agood idea to be prepared.A perfect storm of IR35 risk is gathering for contractors. On the one hand, we now know that a third of contractors who take thebusiness entity tests and are in the high risk band still go on to pass the more accurate ContractorCalculator Free Online IR35 StatusTest.That means it is extremely likely that, despite being viewed as high risk according to HMRC’s own risk assessment tool, they are outsideIR35. HMRC is therefore gunning for contractors using a highly inaccurate risk assessment net likely to catch huge numbers oflegitimate contractors.We also know from IR35 practitioners defending contractors caught by HMRC’s IR35 compliance campaign launched in May 2012 thatmany such contractors have no IR35 investigation insurance.Anecdotal evidence shows that contractors without insurance are more likely to be found inside IR35 than those who have, irrespectiveof the facts of the case. The bottom line is that, when funding the average £5,000 costs of defence from their own pockets and nottheir insurer’s, more contractors throw in the towel, erroneously thinking to cut their losses rather than fight HMRC.Finally, a senior IR35 practitioner has calculated that HMRC’s 36-strong IR35 compliance team has the capacity to handle well in excessof 1,000 IR35 reviews each year. That potentially increases the chances of contractors undergoing an IR35 review four-fold.It certainly brings the risk of an investigation and IR35 review up to that experienced in the bad old days of the early ‘noughties’, whenHMRC was busy experimenting with its shiny new IR35 toy.HMRC now has another new toy, its risk-based approach and business entity tests, which it is equally keen to try out on unwarycontractors who can’t afford professional assistance to defend themselves, because they never bothered with tax investigationinsurance.You can bet that if it enjoys some early successes, and generates a decent amount of tax, HMRC will plough further resources intoIR35 compliance, resulting in more investigations and more genuine contractors having to pay more tax than they really owe.But tax investigation insurance, including cover for IR35 investigations, is widely available and can cost less each month than theequivalent of a round of drinks. You even get it included with your PCG membership.So, for peace of mind, take our Free Online IR35 Status Test to determine your likely IR35 status. And, if you don’t already have it,think seriously about investing in insurance.Dave ChaplinCEOContractorCalculatorView all our commentatorsDave Chaplin is a former IT contractor inthe City of London, and is founder andCEO of ContractorCalculator, and authorof the Contractors' Handbook.Published: Wednesday, March 06, 2013Started in 1999, ContractorCalculator(this site) is the leading independentwebsite for the UK contracting industry –most of whom are highly skilledknowledge workers.Read Full Profile...© 2013 All rights reserved. Reproduction in whole or in part without permission is prohibited. Please see our copyright notice. If youwant to use any content you have seen on this site then please request our media pack and ask for details of our Content LicencingService.Readers Comments...Be the first to comment on this articleAlso of interest...Related Guides:Related Calculators:

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