With the shadow of IR35 legislation still looming at large over both public and private sectors, the latest information issued by HS2 suggests that non-compliance might abound on a much wider scale than first thought.
Responding to a Freedom of Information (FOI) request from tax specialist Contractor Calculator, HS2 confirmed that 979 of the 1,001 assessments conducted in 2018 returned an ‘inside IR35’ verdict, with only 22 contractors deemed outside the scope of the rules.
These findings are consistent with those returned by Network Rail in 2018, which judged 99% of contractors to be caught by the IR35 tax legislation. Further information disclosed by Network Rail revealed that the organisation had adopted an unlawful role-based ‘blanket’ approach to status assessments, which will raise further questions about HS2’s own practices.
Both figures are worryingly inconsistent with the estimation given by HMRC that only around one-third of contractors will find themselves caught by IR35 regulations. They are, however, comparatively similar to the rough proportion of ‘inside IR35’ outcomes found by other public bodies using CEST – the tool primary used by public sector bodies to determine tax status of their contractors.