The senior Inland Revenue civil servant in charge of freelance tax measure IR35 says she hopes to produce guidelines which are clear enough for contractors to judge for themselves whether they qualify - but is preparing for extra queries nonetheless. Assistant director Sarah Walker, told us in an interview: "Contractors will judge for themselves. If they want certainty, they can come to us for a ruling, and that will be binding. If they don't do that, we have ways of checking up later through our normal compliance procedures." The Revenue recently published draft guidelines (http://www.inlandrevenue.gov.uk/ir35/draftgn.htm) offering three examples of contractors who will and will not be hit by IR35, based on a series of court judgements. Those who work on concurrent contracts, use their own home offices and get paid fixed rates per job are more likely to avoid the tax measure. However, Walker warned: "It's not something you can reduce to a series of tick-boxes. The way we decide is by looking at the whole picture." Civil servants are meeting interested parties, including tax experts and contractor groups during the next couple of weeks to discuss the proposals. The final guidelines will appear early in January. Some groups have already said that the three examples given are insufficient, but Walker said many examples could muddy the waters further. However, she was interested in a suggestion from chartered tax advisor Anne Redston of Ernst & Young, that "The agencies and the employers should help by using standard contracts agreed with the Revenue." Standard contracts would leave agencies and employers to determine a contractor's IR35 status, rather than the contractor, Redston said. Walker replied that the Revenue may give guidance on standard contracts, but she noted that the issue would be complicated when individuals have multiple contracts, which can boost their claim to a self-employed classification and enable them to avoid IR35. On the consultation process, Walker dismissed contractor claims that it was heavily influenced by services houses, with which standalone contractors compete. "It's absolute nonsense," she said. "The changes we made in September made it easier for one-person firms to compete with the big US consulting firms. The original proposals in the Budget would have made that very difficult," she said, referring to extra administration that the original IR35 proposals required of employers. "What we did in September was take away that requirement, and said 'compete with EDS, compete with Arthur Andersen'. If we had been influenced by them, we would not have done that. It isn't true there were secret meetings with EDS, or any American company," Walker added. WEB LINKS HM Treasury - IR 35 guidelines, www.inlandrevenue.gov.uk/ir35/.
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