If the beginning months of 2019 serve as a sign of things to come, then things are finally looking bright for the contractors in the UK. The amicable environment owes to the favourable conclusion of two recent IR cases which closed positively for the contractors.

The fact that HMRC is busier with the IR35 has not affected them from improving their productivity on contractor cases as reports suggest that they are working on one case per day since the last fourteen days.

It seems that the forthcoming IR35 reform—which is expected to be implemented in 2020—has not stopped HMRC from addressing inquiries associated with IR35.

The recent case was fascinating to begin with as its enquiry status was Corporation Tax. There were questions pertaining to IR35 in the opening letter which emerged during PAYE.

Interestingly, HMRC began IR35 enquiries, which was confirmed by the fact that the clients got a formal notification. Such proceedings could have been predicted as HMRC holds the information sharing privileges among departments.

The second case was made prominent through the HMRC’s struggles. In the end, the case had to be terminated as HMRC was unsuccessful in dealing with the end client for the verification of information.

It is not known why they were unable to provide information, but their closing letter directed a complaint to the HMRC. The letter stated that HMRC did not provide a reply to the contractor when they sent their information. In response, the HMRC explained that the actual inspector who was assigned to the case had to retire, and there have been no signs for the appointment of a replacement.

Unsurprisingly, this was not something new. In the past, the inspectors who called it a day had an adverse impact on enquiries as their retirements caused cases to be delayed.

The initial months of this year have so far been promising for our clients. However, we cannot say the same for HMRC which remains disorganised—a bad sign for the future.

As businesses in the UK have begun preparing to address the impending IR35 reform, for a change, it might be good for the HMRC to reflect on their internal structure. Going by the latest proceedings, the HMRC is struggling to run smoothly which puts the taxpayers in the most vulnerable position.

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