HMRC has launched preliminary IR35 investigations into Transport for London (TfL). The public sector organisation was approached by HMRC, who asked for information about its limited company contractors.
There are fears that this is another fishing exercise that could result in an outcome similar to that of NHS Digital. The public organisation is currently facing a £4.3m tax bill for wrongly assessing their limited company contractors.
The public sector has had two years to get to grips with the Off-Payroll reforms. However, the fact that public organisations are still making mistakes shows how difficult the rules are to apply.
TfL were one of the first public sector organisations to ban limited companies back in 2017. Like many other engagers, they were later forced to rescind the ban in order to secure continued access to key talent.
An email from Hays Recruitment to affected TfL contractors informed them about HMRC’s inquiries while reassuring them that there was no need for concern. However, tax experts are warning that this is unrealistic.
IR35 expert Kate Cottrell said. “Claims from large and medium-sized businesses that there is currently no need for concern at this time is shocking. Contractors need to know the risks they face”.
While TfL is downplaying the probe as a “standard IR35 compliance check”, the opinion among IR35 advisories is that these current checks in both the public (NHS Digital) and private sectors (GSK) are more targeted than routine compliance activity.
Although the government has stated that there will be no retrospective investigations from April 2020, this doesn’t apply in the meantime. Perhaps this could account for HMRC’s relentless IR35 activity in the face of significant criticism.
This content has been supplied by IR35 Guru.
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