IR35 enquiries yield £200,000 for the taxman last year

THE TAXMAN'S yield from enquiring about the status of the self-employed was just over £200,000 in the last tax year.

HM Revenue & Customs recouped just £219,180 from enquiring into the IR35 status of workers between 6 April 2010 to 5 April 2011. The previous year saw a yield of £155,502, according to information on the taxman's website.

The two years saw a combined 25 enquiries opened, compared to 25 in 2008/2009 and 104 in 20007/2008.

An HMRC spokesman said: "IR35 undermines the use of disguised employment to avoid tax. The deterrent effect always played a key part in the intermediaries legislation and it would be wrong to focus on the cash yield alone as a measure of success."

[HMRC's] pursuit is not bringing in the revenues - they should leave it and concentrate on other areas," said Baker Tilly head of tax George Bull.

"These figures confirm what PCG has always said, that the tax yield from IR35 is minimal and that the stress and damage done to the UK's 1.4 million genuine freelance businesses is completely unnecessary," said PCG managing director John Brazier.

"It also shows us that IR35 is an unwarranted measure introduced by the previous government.

"Despite the now evident worthlessness of IR35 it remains in place and, as directed in the Budget this year, its administration is being reviewed."