Blanket approach to inside IR35 assessments

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A Freedom of Information request by ContractorCalculator has revealed some troubling statistics about IR35 assessments. The request showed that 98% of the IR35 employment status assessments that HS2 carried out last year deemed that contractors had been caught by the Off-Payroll rules which, in turn, added to the suspicions of non-compliance with the public sector rules.

HS2 confirmed that out of 1001 assessments that it carried out in 2018, 979 were considered to be inside IR35 with only 22 contractors deemed to be outside IR35.

These figures are close to matching those that were obtained from Network Rail. Figures from that company indicated that 99% of contractors were inside IR35. Following further investigation, it was revealed that Network Rail had unlawfully adopted a blanket approach to its status assessments. Given the similarity of the figures, it raises questions about whether HS2 is adopting a similar approach.

Dave Chaplin of ContractorCalculator said: “Just last week, ContractorCalculator broke the news that FOI responses from Network Rail exposed what the public body had referred to as a ‘strawman process determining status’. This process involves assessing the status of generic roles using HMRC’s Check Employment Status for Tax (CEST) tool, before applying that determination to contractors undertaking the job. Despite being non-compliant with the Off-Payroll rules Network Rail correspondence revealed that the practice was developed in conjunction with, and approved by HMRC.”

The high number of contractors inside IR35 returned by the BBC, Network Rail and HS2 are concerning, and it raises further questions about HMRC’s CEST tool.