From 1st April 2010 HMRC has the ability to list the name and address of any tax payer that is shown to have deliberately understated their tax by more than £25,000.
If a contractor operating outside IR35 is subject to a HMRC enquiry that concludes that the assignment should have been inside IR35, and the contractor cannot demonstrate taking reasonable care in assessing the assignment status, then they could find themselves listed.
It is widely expected that the list will become part of the standard referencing process adopted by both recruitment companies and end clients; especially those that operate in sensitive areas such as banking, financial services and defence.
You can find details of our assignment confirmation service here; designed to keep you safe and minimise your risks in this area. The service comes with a years free professional membership.
New rules announced in the March 2009 Budget come in to effect from April 2010. These rules allow HMRC to list the details of any tax payer who is found to have deliberately understated their tax position by more than £25,000.
The rules contain the specific details on the circumstances when HMRC will be able to list a tax payers details but in summary; where HMRC are able to apply penalties then there is a risk that you could be listed.
Whilst on the surface £25,000 may seem a significant amount; for many contractors this is easily reached if HMRC successfully challenged the IR35 status of assigments.
Where a contractor was unable to demonstrate taking reasonable care, at ouset, in assessing their status this could leave them exposed to the list.
As the list grows it is widely anticipated that it will become a standard part of the referencing process carried out by recruitment companies and end clients on contractors; particularly in sensitive markets such as banking, financial services and defence.
With this increased risk it is now more important than ever that contractors ensure they can demonstrate taking reasonable care in assessing their assignments status. Professional Passport has agreed a fixed price service for our members and this includes a years free professional membership.