New HMRC IR35 business test could be published in April

The minutes of the most recent IR35 Forum meetings reveal that the body expects to publish an IR35 business test and typical scenarios to help establish the risk any given professional services company has to being caught by the IR35 rules.

According to the just-published minutes of the IR35 Forum, a body set up after Budget 2011 to oversee the improved administration of the Intermediaries Legislation, a new set of IR35 tools is likely to be made available online during April 2012.

New business tools to aid IR35 compliance

The tools consist of a set of typical IR35 scenarios, and a business test to help people determine the likelihood that a business would be investigated for IR35 compliance.

The business test would be made up of a number of questions, weighted according to the importance of the answer. The total score, made up of negative and positive scores according to the question, would provide the risk score (high, medium or low risk to being investigated).

There were many concerns expressed by Forum participants at publishing a test without further consultation, however the aim of the body is to finalise the test via correspondence between members, before publishing the test on the HMRC site some time in April.

Of the seventeen original typical IR35 scenarios considered by the Forum, fourteen resulted in the same conclusions by external members and HMRC. Of these fourteen, just six will be published online to help people establish whether or not they are caught by IR35.

Of the six, two are examples of being inside IR35, two are outside IR35, one is a ‘grey’ scenario (which presumably will occur quite often given the ambiguity of the legislation), and the last one involves a personal service company which starts a contract outside IR35, but due to changing circumstances, is subsequently caught by the rules.

According the minutes, which you can access here in PDF format, the Forum members (which include industry, accounting and employment experts) will finalise both sets of tool over the next few weeks before aiming to publish them on the HMRC site in April 2012.