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IR35 needs greater focus

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Uncovering the few real cases of disguised employment should be the new focus of HM Revenue and Customs (HMRC) when it comes to applying IR35 rules.

That is the view of Jeff Brooks, chair of the technology group at the Recruitment and Employment Confederation (REC).

The REC is one of the groups invited to join the IR35 Forum. The Forum has been set up after the Chancellor, George Osborne decided not to abolish the controversial tax regime in his Budget but instead to request that HMRC adopts a more effective approach to implementing the system.

IR35 was set up in order to prevent employees from gaining a tax advantage by assuming self-employed status.

Mr Brooks said: “We have to find a way to focus the system on the rare cases of actual disguised employment, and make sure that the vast majority of contractors who have done nothing wrong don’t have to worry about being subjected to a HMRC investigation or tribunal that could last years.

“It has always been the complexity of the rules, and the uncertainty they create, that has made the system unacceptable for contractors and the recruiters that find them work. This has also wasted countless hours of tax officials’ time, and it is in the interests of all sides to find a quicker, more efficient way to crack down on the few real instances of false self-employment.”