IR35 Forum calls for Business Entity Tests to be scrapped

A focus group backed by the IR35 Forum has found that Business Entity Tests are not being used in the way intended when they were first piloted in 2012.

The group found that Business Entity Tests, which were initially drawn up to help freelancers and contractors find out their risk of IR35 enquiry, are being used incorrectly by public sector clients, who are using them to determine employment status.

It was noted that IR35 advisers rarely consider BETs, as they rarely suggest any risk other than ‘medium’ or ‘high’, and in themselves these risk ratings do not mean a worker is inside or outside of IR35. The group also noted that the six IR35 scenarios which are meant to show when IR35 applies are unhelpful and not detailed enough.

The group recommended to the IR35 Forum that BETs ‘would be best… abolished’, as they are not working in the way they were designed to. The conclusion comes as the IR35 Forum’s review into piloted IR35 processes is due to be published, and thus the group’s ideas could well be used to inform any decisions made by the Forum.

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