IR35: HMRC 4 – 0 Taxpayers
9th June 2025
Over recent years HMRC have sharpened their appetite to collect more tax through the 25 year old IR35 legislation. These rules seek to tax individuals who provide their personal services through their own limited company as if they were directly engaged as an employee of the end client.
If IR35 applies, this stops tax reduction by:
- Sharing personal income with a spouse, to utilise their tax allowances and lower rate tax bands,
- Profit extraction by dividends (which are taxed at a lower rate and are NIC free),
- Leaving profits within the company, to either be extracted in the future at a lower tax rate during retirement or as a capital gain via a liquidation,
- Claiming tax relief on a wider range of expenses.
HMRC set up a specialist IR35 compliance team to take on high profile investigation cases. Many of those targeted are ex famous footballers. Presumably to make the news, and to set an example for the less famous and less sporty knowledge based consultants to read about and check their own tax compliance.
HMRC Wins
Gary Lineker – Arising from presenting Match of the Day (settled out of Court)
Phil Thompson – Arising from presenting Sky tv programmes.
Neil McCann – Arising from presenting Sky tv programmes
Alan Parry – Arising from presenting Sky tv programmes
Taxpayer Wins
None
Draws
Bryan Robson – Arising from ambassador services provided to Manchester United FC.
Eight years ago HMRC launched their Check Employment Status Tool (CEST), to help taxpayers decide whether their contractual terms and actual work practices are inside or outside IR35:
This digital tool has recently been updated, and it can continue to be used anonymously. HMRC have gone on record again stating that they will stand behind the outcomes of using this tool where it has been used correctly. So if you provide knowledge based consultancy services to a single or just a few clients, the best advice is for you to check your own circumstances periodically, and save the results.
Disclaimer - All information in this post was correct at time of writing.
