HMRC to introduce new IR35 test26/04/2012
HMRC are set to introduce 6 ‘IR35 scenarios’ to help limited company contractors determine their IR35 status. HMRC’s decision to review the controversial legislation came after many, within the industry, questioned its ambiguity.
The 6 scenarios are said to work alongside an ‘IR35 business test’ which will ask a series of questions in order to identify the level of risk a limited company contractor has.
Depending on the answers, the individual will be presented as either a plus or minus for each question and when totalled, they will fall into a category – low, medium or high risk.
According to IR35 specialist Kate Cottrell, the IR35 scenarios are likely to be the first thing an individual should read before taking the business test. She went on to formulating a way to self-assess oneself:
“[choose the most befitting] scenario, + HMRC guidance, then + your high, medium or low risk score total = your risk of IR35 investigation.”
Out of the 17 scenarios initially studied by the IR35 forum, it appears that only 6 will be used. HMRC said that any more “would cause confusion rather than providing clarity”.
We understand that the scenarios are to be made available on April 30th 2012 and we will be publishing an up to date press release with links to the main source on HMRC’s website.
For more information