You have gone through a status determination test via CEST, and a HMRC investigation, and you are deemed to be working inside IR35 for a contract. Yet you are adamant that you are working outside IR35. What can you do?
You have the right to appeal the decision, but how do you go about making your appeal?
The first step is to appeal with your client. HMRC’s off-payroll reform introduces a ‘client-led disagreement process’, which is designed to give contractors the opportunity to overturn what they feel is an inaccurate determination of their status.
As a contractor you can contact your client and they are allowed up to 45 days to respond to your dispute and provide their reasons for determining your IR35 status. From their response you can confirm their decision or request it to be changed.
If you need to escalate your case, HMRC offer a ‘Alternative Dispute Resolution’ (ADR) service (HMRC, 8 July 2019) where your case will be heard by another inspector and an HMRC mediator will work with you and the HMRC officer dealing with your case.
ADR can be used before and after HMRC has issued a decision that can be appealed against, and at any stage of an enquiry, including:
- during a compliance check when you are unable to reach an agreement with HMRC, or where progress in the enquiry has stalled
- at the end of a compliance check, when a decision has been made that you can appeal against
ADR does not affect your right to appeal, or to ask for a statutory review.
Each application is considered on a case by case basis. ADR is not a statutory process and HMRC reserves the right to reject applications that we do not consider appropriate for ADR. You can find out more about ADR here.
Alternatively, you can take your case further to an IR35 tribunal where you can appeal an IR35 decision made by HMRC in court. This can be an expensive process in legal fees and expenses, so it might be a good idea to consider tax enquiry & legal expenses insurance before you take this step.
Caunce O’Hara offer a range of IR35-based insurances and an IR35 Contract Review service. Through our partners at Markel® Tax we can also offer you expert advice regarding IR35 taxation.
Sources:
Gov.uk, (2019) Tax Compliance Checks. [online] Gov.uk. https://www.gov.uk/tax-compliance-checks [Accessed May 2020]
Gov.uk, (March 2020) April 2021 changes to off-payroll working for clients. [online] Gov.uk. https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-clients [Accessed May 2020]
HMRC, (8 July 2019) Use Alternative Dispute Resolution to settle a tax dispute. [online] HMRC. https://gov.uk/guidance/tax-disputes-alternative-dispute-resolution-adr [Accessed May 2020]
HMRC, (2018) Compliance checks series – CC/FS21. Alternative Dispute Resolution. [online] HMRC. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/866631/CCFS21_English.pdf [Accessed May 2020]
Gov.uk, (2015) Policy paper. Alternative dispute resolution for consumers. [online] Department for Business Innovation & Skills. https://www.gov.uk/government/publications/alternative-dispute-resolution-for-consumers/alternative-dispute-resolution-for-consumers [Accessed May 2020]
If you would like to speak to one of our IR35 experts about your IR35 status, please contact 0333 321 1403 for details and to book an appointment.
