IR35 review could simplify guidance on compliance

HMRC plans to review IR35 guidance and provide a cost benefit analysis of the impact of the rules, which assesses whether workers should be classified as employees and taxed at source

However, there will be no quick answers with HMRC stating that it would not implement any changes before December 2023.

The response from HMRC follows criticism in a May 2022 report by the Public Accounts Committee (PAC), which said that there were high levels of non compliance with the IR35 rules as a result of ‘poor implementation by HMRC and other government bodies’.

HMRC has now published a detailed response to the PAC’s report, outlining a number of changes to improve the way the IR35 rules work, including updating guidance to reduce levels of non-compliance.

However, HMRC said it would be unable to provide regular estimates on the level of non-compliance with the rules, saying this would not support taxpayers with overall compliance.

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