IR35 Business Entity Tests Scrapped by HMRC
BETs won’t be taken into account when HMRC opens an IR35 enquiry on or after 6 April 2015. However, if HMRC opens an enquiry before then, and a business can show to HMRC’s satisfaction that they have taken the BETs with an outcome outside IR35 or in the ‘low risk’ band, then HMRC will close the enquiry. They also won’t open another IR35 enquiry for 3 years if the information provided is accurate and circumstances (in particular working arrangements) don’t change in that time.
Where HMRC closes an IR35 enquiry based on the BET results, the business should keep those results and any evidence relied on to take the tests for at least the 3 year period involved.
HMRC will also withdraw the example scenarios published with the BETs from 6 April 2015. There are no plans to replace the BETs or example scenarios.