Revenue will ask agencies to supply contractors details

In a story in July UKTECH described a news report which stated that the Revenue were to write to over 3000 agencies requesting details of payments made to contractors. We have been sent a copy of the letter and can now confirm details.

The letter states that a notice under section 16 of the Tax Management Act of 1970 will be issued to the agency around 6th April 2001. That the notice is a statutory requirement and is likely to be issued annually thereafter.

In the attached information it provides further information

Section 16 is a legal requirement that "every person carrying on a trade or business shall, if required to do so by notice from an inspector, make and deliver to the inspector a return of all payments of any kind specified in the notice"

The payments qualifying for inclusion are "gross payments for services rendered by non-employees" and include payments made to an individual, partnership or company.

With regards to the information being protected by the Data Protection Act there is a specific exemption for the supply of information that is: "required under any enactment". Therefore "there is no legal barrier to your providing the information to the Inland Revenue."

The information is to be supplied by a paper form for each payment or can be made on an Excel spreadsheet. The information requested includes

>Supplier Company name and address

>Gross payment made in the period

>VAT chargeable

This information should be completed for all payments exceeding £1000 and must be sent back within 30 days.

This information will allow the Revenue to collect a definitive list of Ltd Co contractors working through agencies. They presumably will then correlate this list with returns made by those Ltd Co contractors, to draft up a list of contractors working through agencies who claim to be outside IR35 (By continuing to draw dividends). They then have up to six years to carry out further investigations.

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Andy White