HMRC’s Employment Status Service (ESS) Launched
No doubt you will already be aware that HMRC’s long awaited digital tool for determining IR35 status, now called the Employment Status Service has been launched. The tool is in public beta testing mode and HMRC has confirmed that they will standby the results generated by the tool providing the correct information has been inputted. This is good news because we had feared that the beta test version would not be underwritten by HMRC until later this month. Initial feedback suggests that the Employment Status Service is better than widely anticipated and contrary to expectations is not simply deeming the majority to be caught.
However, we remain very concerned that the ESS is missing a vital component of IR35 legislation and case law, that of Mutuality of Obligations. By virtue of omitting this, HMRC is in fact changing IR35 legislation and case law, and knowingly doing so, despite assurances that IR35 itself would not be changing. Furthermore, creating a tool that is distinct from case law will give rise to significant numbers of appeals, however, despite recommendations from many stakeholders, HMRC has omitted to include any such appeals process. This means that the only option available to contractors who have been erroneously determined as inside IR35 is to tolerate the deductions and pursue reclaiming from HMRC at a later date.
Published on: 07 March 2017 - By: FCSA