Well, if IR35 is meant to be on its metaphorical deathbed, it appears to be in suspiciously rude health for a patient supposedly on its last legs. The Professional Contractors Group (PCG) is urging its members to be “especially vigilant” after one of them was drawn into a face to face meeting with an HMRC Officer, ostensibly to discuss the treatment of VAT and expenses on his new company.
The surprise came in the covering letter sent with the minutes of the meeting, which blithely informed him that he might be IR35 caught. The issue of IR35 had not been discussed in the meeting at any point. The HMRC Officer appeared to have based his assumptions on mileage claims alone.
The moral of the story? We’ve all seen those classic crime movies of yore where the suspect is interrogated first by a good cop to soften him up, then by a ‘bad’ cop. When HMRC plays bad cop, at least everyone knows where they stand; it’s when it starts playing good cop that you might begin worrying. If you’re a contractor and you’ve been invited to attend an informal HMRC meeting, PCG warns that there may well be an ulterior motive.
Interviewees can be lulled into a false sense of security at such meetings, which are often arranged through a bland letter or telephone call, with no formal notice of dispute being issued. It’s urging its members to call the PCG Tax Line for advice before proceeding – disputes need the input of qualified experts, even when they’re misleadingly referred to as ‘informal meetings.’ PCG Plus members have the option of handing over to an adviser to deal with the tax inspector from the outset.
But whatever you do, beware the good cop – that smile looks more like the one you’d find on a crocodile than on a friend.
This is nothing new. They did this to me 20 years ago, only a couple of weeks after I set up my company. I was so shaken up after the meeting I was in tears and nearly got run over! I learnt never ever to trust the inland revenue and never ever to speak to them personally. They WILL try to trap you and run rings round you, and they KNOW they can do whatever they like because they have the power of gods, as near as damn it.
ps: this was after I had been informed by several people “if you are open and honest with the inland revenue, they will treat you fine”!