HMRC questioned over IR35 investigations

The Professional Contractors Group is pressing the government for details of
the cost and efficiency of IR35 investigations carried out by HM Revenue &
Customs after figures revealed a ‘success’ rate of less than 1% for the tax

PCG chairman Simon Juden has written to Dawn Primarolo, paymaster general to
the Treasury, asking whether the government is planning to review the criteria
for launching IR35 investigations.

‘We know that out of more than 1,000 cases investigated, just three were
found to be in breach of IR35 rules. This clearly raises several questions about
the efficacy and cost to the taxpayer of such investigations,’ said Juden.

He added that more than 500 PCG members had been put through investigations,
which can be ‘extremely stressful, time-consuming and costly, not to mention
damaging to client/contractor relationships’.

‘We have to ask whether this dogged pursuit of freelance contractors and
small business owners is justified. How much is each investigation costing the
taxpayer and how much extra tax does it yield? PCG has always campaigned for
clarity, consistency and common sense in taxation – these figures suggest none
of those.’

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