02 May 2008

Brookson Managing Director, Martin Hesketh, was recently invited by Contractor UK to provide a response to HMRC’s Question 6 on its P35 form.

“It is fair to say that Question 6, when it was announced recently, created a lot of confusion and debate and HMRC has since moved to clarify its position. HMRC asked a similar question on page TR4 of the 2007/2008 Self Assessment which caused similar confusion and the industry is still awaiting clarification.

“We believe that Question 6 was introduced to help HMRC gather information on service companies. The obvious areas of interest for HMRC in this regard would appear to have been IR35 compliance, the impact the MSC legislation has had since it was introduced just over a year ago and the expected S660 legislation, which as it turned out was eventually delayed for 12 months for further consultation. We believe that such information could have been used for risk profiling of companies and individuals for the purpose of targeting HMRC compliance reviews. Indeed, the fact that its latest statement apologises for the confusion caused, and specifically states they will not use the information received from these questions for risk profiling purposes, confirms this.

“We have been keeping our customers up to date with this issue as it has developed and have already supported them in submitting their P35s to HMRC in line with the latest HMRC communications. There is an ongoing concern in the market place in relation to those companies which have submitted their P35s on the wrong basis prior to the HMRC latest guidance. Our view is that, given the confirmation by HMRC that P35s already submitted on the wrong basis do not need to be changed and re-submitted and the commitment not to use the information already received, any risk in this regard is very low”

Click here for further information on P35 and P14  which can be found through the Guidance section of the Members' Area of our website. 

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