There has apparently been a sharp increase in the number of IR35 reviews being opened by HMRC. The intended effect of the IR35 rules is to level the playing field between employees and “contractors” who work alongside them through personal service companies by looking through the personal service company to apply PAYE to income caught by the rules.

Under a recent Freedom of Information Act (“FOIA”) request, it was shown that HMRC does not hold data on the number of companies or individuals identified as possible targets and the amount of information HMRC is failing to collect on IR35 potentially raises a lot of questions about the business case for it.

IR35 investigations can take years and can be hugely stressful for contractors who are just trying to get on with the job.

Earlier this year, HMRC increased the number of teams working on IR35 from three to four and so we are no doubt going to see enquiries continue to rise in the future.

Whilst we have not seen an increase in these reviews ourselves, we have seen an increase in status enquiries generally in recent months and so this does appear to be an area that HMRC are concentrating on.

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