Disguised Employment Anti-Avoidance Legislation 23rd October 2015 IR35: CIOT and HMRC both suggesting changes required. The Chartered Institute of Taxation (CIOT) has suggested a new approach to tackle those who are ignoring or manipulating IR35 rules so they can avoid tax payments to HMRC. HMRC have recently suggested transferring the IR35 compliance obligation from the worker and his/her personal service company (PSC) to the organisation that they are physically working for. HMRC have also suggested replacing the existing IR35 test with a ‘supervision, direction or control’ test. The CIOT believes a better option would be to impose an annual reporting obligation on organisations that are engaging with these workers, based on the PSC notifying them whether or not it considers that IR35 applies. There should also be an obligation for the PSC to notify that organisation that it is committed to applying IR35. Under the CIOT’s proposed approach the organisation would then report what it had been told by the PSC and whether or not it was in agreement. If the organisation was to wilfully mislead HMRC that IR35 does not apply, when in fact it did, then any debt owed by the PSC in relation to non-compliance with IR35 would fall back to the organisation concerned.