New light has been shed on the new taxation tool currently being tested by HMRC.

Andy Hallett, commercial director at staffing specialists SThree, posted on his LinkedIn account an review of his visit to HMRC’s HQ to review the new digital tool

Hallett explains that the folks at HMRC are referring to the tool as the ‘Employment Status Service’ – a catchy name that looks like it might just stand the test of time, but will almost inevitably be known as ‘ESS’.

Hallett says that HMRC’s methodology for the new tool puts ‘the user at the centre of everything they do’, before adding ‘the cynic in me thinks 33 interviews and 22 testing sessions does not compute, but time will tell.’

The development of the tool falls into five key stages: Discovery, Alpha (Prototype), Private Beta, Public Beta and Live.

Hallett writes that those familiar with submitting online self-assessments won’t be in for any nasty user interface surprises, as that it bore a similar look and feel to the portal used for this task.

“The ‘Service’ starts deciding who you are, an engage, agency or worker,” writes Hallett. “It then asks you whether this assignment has started or is due to start. The next step takes you through the same question sets but the language is relevant to the audience. The questions centre on the key areas you would expect of Supervision Direction and Control and business setup. The questions all roll up to give a decision of inside IR35, outside IR35 or seek further guidance. There is only one question which automatically rules an assignment inside IR35 and that is around being an officer of the client.”

Hallett says that the service is anonymous , but that users can download a PDF as proof should they require it.

“Based on what I saw today, I’d imagine that the service will have to be used twice to first assess the assignment, and then secondly to validate the assignment in respect of that worker’s business setup,” he adds. “It won’t be enough that the role be outside, but also the worker must operate their affairs in a manner outside of IR35.”

The version Hallett and those in attendance on the day he visited HMRC saw was an Alpha Prototype. Hallett  went onto write that according to the HMRC, the tool will be ready in March.

If this is indeed when the tool is released, this would be counter to what some MPs called for last week. They proposed delaying the introduction until the tool has been ironed out somewhat.

Hallett added that this ‘should be of great concern to everyone’, saying that ‘implementing the changes for many agencies and end clients is going to be tough as it is, but this is cutting it too fine.’

Should you want some peace of mind, we offer a full contract review amongst other services to help you prepare for IR35. We’ll give a pass or fail based on the current contract you hold, along with comprehensive comments on how to improve any problem areas.

We also offer IR35 investigation insurance with representation from our Head of Tax and resident IR35 expert Andy Vessey ATT should it go to tribunal.

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