Contractors don’t trust HMRC’s IR35 advice. A Freedom of Information request by ContractorCalculator reveals the low number of calls made to HMRC’s IR35 helpline. HMRC admitted to ContractorCalculator that it only began logging calls to the helpline as recently as August 2008, and that each year only around a 1000 people who call do so to discuss IR35.
ContractorCalculator CEO Dave Chaplin says: “With an estimated 300,000 limited company contractors active in the UK, that’s only 0.33% who choose to ask HMRC for IR35 advice. We have more contractors taking our IR35 Online Test in a month than call HMRC’s helpline in a year!”
Chaplin believes that these figures highlight contractors’ lack of trust in HMRC: “The low number of calls to HMRC’s IR35 helpline suggests that contractors have realised that they are likely to get better IR35 advice from an employment law and tax expert trying to keep them outside the legislation. HMRC simply does not have that focus.”
HMRC’s response shows the number of calls to its IR35 Customer Service Unit from August 2008 to July 2011 ranged between zero and 417 calls per month, often peaking around the tax-year-end periods in April and May. And not only is the number of calls tiny relative to the contractors potentially affected by IR35, but HMRC also admits that only half of the calls are actually about IR35.
“Based on HMRC’s logs, only about a thousand contractors each year call HMRC’s IR35 Customer Service Unit to discuss IR35,” says Chaplin. “Even those numbers have been steadily decreasing, with fewer contractors turning to HMRC, probably preferring to call on contracting service providers who contractors know will be working in their direct interests.”
HMRC clearly faces a public relations challenge to regain contractors’ trust and Chaplin is hopeful that the work of the IR35 Forum will result in an impartial and consistent response for contractors unsure of their IR35 status.