HMRC confirms 'IR35-specific ESI tool'

The taxman has a plan to launch an online Employment Status Indicator to test freelancers’ IR35 status, as predicted to FreelanceUK’s sister website back in November.

Speaking at the December IR35 Forum, HM Revenue & Customs said its aim was to have a beta version of an “IR35 specific ESI tool” by “spring 2016”.

HMRC’s Mark Frampton also told the forum that the hope is for the tool to provide “clearances” on status, much as the Contract Review Service is meant to now, to a “mass” of contract workers.

But the Revenue wants the tool to be “more accessible than the CRS,” though forum members say the “biggest challenge” will be “getting round the trust [issue] of [the] tool”

The minutes from the forum’s meeting add: “Questions are being reviewed to create meaningful questions for users… and getting the wording right [will be important].”

And it will be “very important” to be transparent on what’s asked, the forum’s non- HMRC members said, so the key questions “HMRC are putting into” the tool will be agreed first.

What has not been agreed first (- at least this is the suggestion put to the forum) is how the tool fits with any future statutory amends to IR35.

In fact, asked at the meeting “whether the ESI would be adaptable to work for any further legislative change” to IR35, HMRC said it “would depend on what ministers decide”.

The department added: “[Our] objective remains to find a solution that protects the Exchequer and improves fairness in the system without creating disproportionate burdens on business, or widening the scope of the rules.”

Feb 9, 2016
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