The new IR35 check by the HMRC is now in motion and this new regime all starts with a letter. The letter will likely to contain questions regarding IR35 status asking for the reasoning behind your conclusion of being considered outside of IR35, followed by providing evidence to support this.

This new process of enquiry letters are said to be an improvement from the old investigation process. This new regime is said to give the ability to contractors to explain in detail the actual working practices along with any documentation to support this at an early stage. In doing so this then has the potential to conclude the investigation there and then. If the information and documentation provided is considered suitable under the IR35 legislation, then the matter will be closed and not re-opened for the next three years.

If the documentation provided to support your reasoning for your status is considered unsatisfactory then further investigations may then follow, possibly including HMRC scheduling a meeting with the End User (i.e. your client) to understand their view on the working relationship and how it is actually treated. If this takes place the End User could then provide their ‘view’ on the matter. Depending on their ‘view’, this could be potentially damaging if not conveyed accurately and your IR35 status may suffer.

If you have not done so already, it might be a good time to look into IR35 in more depth and check out the HMRC’s new process. Look into whether you hold IR35 insurance and check what you are covered for under this policy; it might be that you are covered for the initial enquiry stage.

Look into getting your contracts and working practices (existing and current) reviewed by your Accountant, Advisor or suchlike and ask them to confirm their opinion in writing on how they conclude your IR35 status.

Find out ways in which they can assist you should an investigation progress further. Your supporting documentation needs to reflect the actual, real-time relationship you have with the End User. It is more than just having an IR35 friendly contract, working in accordance with this rather than using this as a disguise for employment is one of the reasons for HMRC’s investigations.

Photo by Tony Hisgett