Contractors warned over IR35 trap.
Contractors could find themselves under investigation through clients
Information placed on the Revenue’s website this week reveals that if contractors want their contracts informally checked by the department, clients may be contacted as part of the process.
Ernst & Young partner Anne Redston, a leading IR35 expert, warned contractors to take special care over their contracts and said tax advisers and accountants should make sure their ‘clients know what they are doing’.
The Professional Contractors Group, which won leave for a judicial review of IR35, said the new bulletin was more ‘of the usual Revenue propaganda’.
IR35 has been the subject of controversy since it came into force in April last year. It affects contractors working through service companies and is intended to ensure they pay a fair rate of tax, according to the government.
Contractors maintain they are unfairly penalised by the measure. A date of 13 March has been set for the review in the High Court.
To read more on IR35 go to www.inlandrevenue.gov.uk or www.pcgroup.org.uk.