HMRC has announced that it will be withdrawing the ‘Business Entity Tests’ (BETs) from April next year. The tests were introduced just two years ago as a way of helping individuals work out their risk of being investigated under the ‘IR35‘ legislation, but have proved to be unfit for purpose.
IPSE’s Director of Policy and External Relations, Simon McVicker, greeted the announcement from HMRC by saying: “The BETs had the potential to bring real clarity to independent professionals working through their own limited companies. Instead the tests were badly designed, poorly scored, and misused from the outset, much to IPSE’s dismay. I am therefore pleased to hear that they will finally be scrapped. They have created more uncertainty, not less, with clients especially in the public sector, wrongly using them to assess the tax status of contractors.”
Simon McVicker led a working group of HMRC’s IR35 Forum on the Business Entity Tests. All the external members of this group unanimously supported the abolition of the tests, which IPSE had argued from their introduction were flawed in both scoring and application. “Businesses and the public sector must now stop using the BETs. There are no shortcuts when it comes to engaging highly professional contractors: clients must provide good, solid contracts with independent professionals and establish clearly what the business relationship will be at the outset.
