HMRC have accepted a recommendation to withdraw the Business Entity Tests (BETs) from 6 April 2015 following a review finding that BETs was used very little and not fulfilling their intended purpose. Accompanying example scenarios will also be withdrawn say Harris & Co accountants Northampton, the specialist small business accountants #accountantsnorthampton
BETs, introduced in 2012, are voluntary tests to help taxpayers self-assess the overall risk that the IR35 provisions will apply to their business. They are made up of a series of weighted questions where the totalled score determines whether the business risk in relation to IR35 is low, medium or high.
From 6 April 2015, the BETs will not be taken into account when HMRC opens an IR35 enquiry. Prior to this date, businesses can continue to take the BETs if they wish or are asked to do so as part of a tendering process.
If an enquiry is opened before 6 April 2015, and a business can show to HMRC"s satisfaction that they have taken the BETs with an outcome outside IR35 or in the "low risk" band, HMRC will close the enquiry. HMRC will not open another IR35 enquiry for 3 years if the information provided is accurate and circumstances don"t change in that time.
HMRC say where an IR35 enquiry is closed by them based on the BET results, the business should keep those results and any evidence relied on to take the tests for at least the 3 year period involved.