HMRC is trying to achieve the unachievable in its bid to develop a comprehensive online IR35 test that provides a definitive result for each user.
This is according to contracting expert Dave Chaplin, founder and CEO of Contractor Calculator, the leading independent website for the UK contracting industry.
“As HMRC progresses its plans to reform IR35 in the public sector, contractors are yet to see anything materialise from the taxman’s attempt to create an online test tool that it claims will provide “upfront certainty” over the employment status of the user,” explained Chaplin.
“Plain and simple, it’s a naïve attempt to achieve the impossible. Building a simple online tool can’t be done due to the inherent complexity. The finest legal minds in the last 17 years haven’t been able to boil down decades of employment case law into an IR35 questionnaire that provides a binary result. How HMRC is going to achieve this in time for April 2017 is anybody’s guess. If it was possible, it would already have been done by now.”
Having founded Contractor Calculator shortly after the introduction of IR35, Chaplin has almost two decades of experience with the legislation and relevant employment case law. With the help of status experts at Qdos, he developed his own free online IR35 test which has been taken by over 95,000 contractors. It took a full year to develop and is still being refined, explaining Chaplin’s scepticism over HMRC’s plans.
“We have the most accurate online IR35 assessment tool available. Nobody else has managed to build an IR35 tool of equal complexity that aligns with case law. But because the answers are subjective, the outcome has to be presented on a spectrum. As a result, roughly half of users are deemed to be borderline with an inconclusive result.
“Our main concern is HMRC will try to draw a line in the sand. Having spoken to personnel at HMRC who have made it clear that the taxman doesn’t like the idea of some people perhaps “getting away with it”, the likelihood is that those who are hovering anywhere between certain pass and fail will automatically be deemed within IR35, an approach that will quickly be challenged by experts rendering the tool both inaccurate and redundant .”