People 'still ignoring their IR35 status'

Date: 11th September 2008

Contractors who fail to consult an accountant or other tax experts about their IR35 status could find themselves facing a large tax bill in the future, one professional has warned.

Susie Hughes, editor of Shout99.com, explained that some contractors believed they could "turn a blind eye" to IR35 legislation. However, she noted these people could potentially face heavy penalties in the future.

IR35 was initially introduced in 2000 and aimed to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries.

"Where the dangers of the ignorance amongst some members of the contracting community may lie is if they just turn a blind eye to it and either don't take any advice or bother to get themselves genned-up on it – they are the vulnerable ones," Ms Hughes explained.

She added that many contractors were "up-to-date with the case law" and even had insurance to cover themselves in the event of an investigation by HM Revenue & Customs.

A recent study by Shout99.com showed that 63 per cent of UK contractors could be at risk of operating in a non-compliant manner and face the prospect of a hefty tax bill because their IR35 status has not been professionally verified.