Contractor IR35 Assessments
Are secret contractor IR35 assessments being done at your client company? Is this information being seen only by management? One contractor tells us that at his client company, IR35 assessments were done in secret and the contractors only found out by chance.
Questions on Secret Contractor IR35 Assessments
- How did this company assess their contractors for IR35?
- Is HMRC’s Check Employment Status for Tax tool reliable?
- Are companies finding all their contractors inside IR35 for very good reasons?
- Are contractors under their clients’ supervision, direction and control?
- Do Employment Tribunals tend to favour HMRC or contractors?
- Has HMRC’s IR35 tool been updated with the results from HMRC tribunal losses to contractors?
- Which company is making the secret contractor IR35 assessments?
- Who is to blame for scuppering the flexible workforce?
- What percentage of contractors do the Government believe are IR35 compliant?
How did this company assess their contractors for IR35
According to a contractor who contacted us:-
“My current client is assessing contractors like myself without officially informing us. We only found out that they were doing this as they accidentally sent an email to all contractors instead of the managers doing the Check Employment Status for Tax (CEST) test giving information on what the managers should do with the test. They followed up with an email retraction to the contractors.”
This is close to being a blanket assessment which even HMRC says is not allowed.
Is HMRC’s Check Employment Status for Tax tool reliable
We’ve seen before that you appear to be able to get whatever result you want from this CEST test.
54% of contractors who sit the CEST test pass it. 31% of then fail it and 15% are Indeterminable.
Yet many companies are testing their contractors – and failing the lot of them, i.e. testing them all inside IR35.
Yet many of those they tested inside IR35 tested themselves earlier and found themselves outside IR35 according to the test.
Are companies finding all their contractors inside IR35 for very good reasons
Some companies are even failing their contractors for reasons that have been previously thrown out by employment tribunals.
For instance one company failed all their contractors for three reasons. One of those was that they had never used a substitute.
The HMRC v Lime-IT decision blew that one out of the water ages ago.
The judge on that tribunal ruled that the burden of proof was with HMRC. Just because the contractor had never used a substitute didn’t mean that they would not have if a good opportunity came up. HMRC and the tribunal couldn’t assume she wouldn’t.
It appears that the CEST tool cannot have been updated to reflect that judge’s verdict.
Are contractors under their clients’ supervision, direction and control
Under Supervision, Direction and Control, companies obviously believe that they are controlling how contractors do a task and directing hem how to do it.
However, contractors disagree and say that they work out how to do the job themselves.
Do Employment Tribunals tend to favour HMRC or contractors
The employment tribunals have tended to favour freelancers over HMRC on this especially in the area of television presenters. In all those cases I have seen HMRC have lost those cases.
The tribunal judges have said that although the TV shows tell the presenters what they want done, the presenters have the freedom to work out how to do it.
It’s the same with contractors creating software. How can someone who doesn’t know how to do their job tell contractors how to do it? It’s the contractors’ own expertise that allows them to do it in the most efficient way.
Has HMRC’s IR35 tool been updated with the results from HMRC tribunal losses to contractors
Companies are finding contractors inside IR35 for reasons that have been rejected by employment tribunals. This means that the CEST tool is working contrary to the results of employment tribunals.
However, this company is going even further. It is assessing their contractors for IR35 without the contractor even being there for the assessment.
It is going even further still. The contractor IR35 assessments are being done without the contractors even knowing that they have been through the contractor IR35 assessments.
The contractors would never have known but for being accidentally sent the emails. It was management who were supposed to get them. The emails wee quickly retracted but it was too late by then.
Which company is making the secret contractor IR35 assessments
I know which company that is but have decided not to say. The reason is that the contractor sent me this information but didn’t tell me who the client is. I can, however, work it out from his profile. However, I don’t believe that gives me permission to reveal the company’s name.
And anyway, it is just the climate that the Government and HMRC are currently creating that is getting companies to blanket ban PSC contractors or test them all inside IR35.
This is getting crazier and crazier all the time. The UK’s big companies are having to spend a lot of their time on the bureaucracy that this throws up.
Who is to blame for scuppering the flexible workforce
And the Government are throwing a grenade at the flexible workforce that they always so widely praise.
And anyone blaming HMRC for all of this are blaming the monkey rather than the organ grinder.
It was the Government who created the regulations and who could easily call off HMRC if they wanted to.
What percentage of contractors do the Government believe are IR35 compliant
After all it was Treasury Minister Jesse Norman who, when answering a question on IR35 in Parliament said “There is only 10% compliance in this area”. Three weeks later HMRC were making exactly the same comment.
If you want this madness to stop then it is the Government you have to convince and not HMRC.
And they are not convinced at the moment.
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