01625 616791

Under IR35 investigation? What you need to know about

outgoing Business Entity Tests (BETs)  


With just 4 weeks to go before HMRC withdraw the Business Entity Tests (BETs), if you are a contractor who has been given notice of an imminent IR35 investigation, you may be wondering whether to take the BET or not. This blog article outlines the current state of play and why at Andrew Lea Finance we feel that, despite the tests being flawed, it is still worth taking them before the April deadline.

BETs axed

At the end of 2014 following pressure from an IR35 Forum focus group, HMRC acted on calls to cease making the IR35 Business Entity Tests (BETs) a requirement, saying that they “Accepted this recommendation and will withdraw the BETs from 6 April 2015.”

This mean that, as of next month, if you are subject to an IR35 investigation, you will no longer have to complete the tests and, furthermore, HMRC have said there are currently no plans to replace BETs with any other test. 

Not fit for for purpose

HMRC acknowledge the fact that the tests had come to be perceived as an employment status test in their own right by many contractors, particularly those in the public sector, and this was never their intention. One of the problems with the BETs was that they had no basis in IR35-underpinning employment status case law, essentially rendering the tests unfit for purpose. 

At Andrew Lea Finance we certainly welcome the change and have to praise the HMRC for admitting the flaws in the system and retracting the tests, as well as the forum infrastructure from which the recommendations were borne.

Current BET results still stand

HMRC have confirmed that the outcome of any test taken since their inception in May 2012 will stand, and they won't open another IR35 enquiry within the 3 year period previously notified to the business.

Still worth taking the test

Due to the fact that, right up until 5th April, contractors can still benefit from a speedy close to any HMRC IR35 review and the three year exemption from further investigations if they attain a BET score which puts them in the low risk band, we think it is still worth taking the BET if you’re given notice of an IR35 review before that date.

Macclesfield contractors: For further information or help regarding an IR35 investigation or the Business Entity Tests, please get in touch with Andrew Lea Finance by email: enquiries@andrewleafinance.com or by phone: 01625 616791