Better chance of winning the lottery now than being investigated for IR35

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IR35 investigations on UK IT Contractors - investigated for IR35
HMRC IR35 investigations on UK IT Contractors - investigated for IR35

Contractors Investigated for IR35

This article, about being investigated for IR35, was first published in 2011. We thought it was worth publishing again. Contractors are worry so much abot the threat of an IR35 investigation that they forget that there is strength in numbers. HMRC can’t investigate everybody.

Indeed, contractors are more likely to win the National Lottery than be under investigation for IR35.

Of course, some people do win the lottery and some do get an investigation for IR35.

However, the odds are not on your side of winning the lottery and they are on your side for avoiding an IR35 investigation.

hmrc comes calling
When HMRC Comes Calling

Contractor IR35 Investigations

There are 1,400,000 freelancers in the UK according to the PCG.

Last year just 23 of them had an investigation for IR35.

That‘s less than 1-in-60,000 according to new figures obtained by the PCG under the Freedom of Information Act.

You‘d have a better chance of winning the lottery than being investigated for IR35 now.

Insuring Against IR35 Investigation

One wonders if it is worth bothering about it at all as you are more likely to be struck by lightning than get investigated for IR35.

One sure thing is insurance companies could cut the insurance premiums for insuring against an IR35 investigation.

All HMRC got from those investigations last year was £220,000.

At their peak in 2004 there were 1,166 investigations yielding £1.9m.

Their peak income was in 2006 when they took £2.3m from 656 investigations.

IR35 Tax and HMRC
IR35 Tax and Contractors

HMRC Investigation Contractors for IR35

It‘s amazing to think that they only investigated 23 cases in the past year.

The insurance was probably worth it back in 2004 when you had just over a 1-in-1,000 of an investigation.

However, the whole thing has settled down now.

IR35 and Umbrella Company Coontractors

There must have been several factors.

The insurance plus the help of the PCG was probably effective with so few investigations succeeding.

Another is that it has become clearer who is caught by IR35 and who is not with a whole lot more contractors (around 200,000) deciding to go the Umbrella Company route.

caught by ir35
Caught by IR35

Contractors Worrying About IR35

So, contractors can sleep more safely in their beds at night without worrying if they are going to be inside IR35. That’s unless of course, they are the type to worry about being hit by lightning while they are asleep.

Good night contractors – and sleep tight.

The evil taxman has just lost his bite.

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