IR35

The saga of IR35 is full of twists, turns, loop-the-loops and groin-kicks, and doesn’t show any sign of letting up soon, following George Osborne’s decision to take the path of least resistance in his 2011 Budget.
Now a freedom of information request from the PCG has forced HMRC to divulge some interesting figures which shed some light on their tremendous mis-management of IR35. Between April 2006 and April 2011 a paltry 322 IR35 investigations were initiated. Not only that but the figures show the numbers of investigations are dropping off significantly – down from a comparatively massive 158 in financial year 06/07 to just 12 in financial year 09/10 (although it did increase slightly to 23 last year).

HMRC also released figures for the amount of tax recovered through IR35 investigations over the same period. Although the relationship between number of investigations and revenue over time is difficult to calculate (as different investigations may not have been finished in the same financial year they were started – in fact they often drag on for a number of years), this data shows if anything a more precipitous drop in numbers.