The ongoing probe into IR35 by the House of Lords has uncovered some interesting information and responses from contractors and those who use their services, as well as from HMRC.

A former tax official  was recently quoted as saying: “Absolutely everyone else has a different experience to HMRC. But based on their past report, I have every confidence that the committee will soon sort the reality from this fiction.”

She isn’t alone in condemning HMRC’s findings and comparing it to the very different experience faced by contractors. In fact, Qdos CEO Seb Maley said that “HMRC’s submission doesn’t tell the full story of IR35 reform” pointing out that “the Government paints a picture that suits it’s own narrative”.

These comments are not surprising given that HMRC said that most contractors and engagers had found operating the new IR35 rules “easy”.

This was at complete odds from the written evidence submitted by industry organisations, such as IPSE, FCSA and the LITRG.

However, HMRC went further saying that most businesses had found the rules “reasonable to apply.”

Many experts have, however, pointed out that the £135 million of fines issued against other Government agencies and departments for failing to comply with IR35 suggested otherwise.

Elsewhere in it’s submission, the tax authority said when it was made aware of contractors “changing the way they work” due to IR35, it became “pro-active” to “raise awareness…among contractors.”

However, the industry has pointed out several examples of HMRC publishing factsheets and guidance late, not adding it to the GOV.UK website or not sending it out to those who must abide by the new rules.

HMRC seems to be painting a vastly different picture to peers than the realities faced by many contractors and, unsurprisingly, it has some experts concerned.

In fact, the 14 page submission shows HMRC not fully answering the Lords’ questions on five separate occasions, each time claiming it is “too early” to say what the impact is.

One area that the peers were particularly interested in was the cost of administering the scheme. It is clear that many PSCs and medium or large commercial organisations have found administering the rules more onerous and costly.

However, it seems HMRC itself has struggled with the administrative burden and revised the initial cost of managing the scheme from £14.4 million to £19.7 million.

It is clear then that the impact of IR35 has been far greater than HMRC had predicted and more wide reaching.

Hopefully, the House of Lords report should be issued later this year, and given the evidence presented to it by contractors and organisations, should make further recommendations to improve the complex and costly IR35 rules.