HMRC waives IR35 penalties for one year

Is this the news we have all been waiting for – confirmation that IR35 is going ahead this April?

On 15 February 2021, HMRC announced in a new policy paper briefing titled ‘Supporting organisations to comply with changes to the off-payroll working rules (IR35)’, that there will be a 12-month waiver for IR35 penalties.

The paper states that “customers will not have to pay penalties for inaccuracies in the first 12 months relating to the off-payroll working rules, regardless of when the inaccuracies are identified, unless there’s evidence of deliberate non-compliance.”

It goes on to highlight how HMRC will support organisations affected by changes to the off-payroll working rules and the following principles will underpin the way they support customers to comply:

+ Support customers who are trying to do the right thing and comply with the rules
+ Help customers meet their responsibilities under the off-payroll working rules
+ Where customers make a mistake, they will help them correct it
+ Check that mistakes are corrected
+ Identify and correct non-compliance with the off-payroll working rules
+ Challenge deliberately non-compliant customers
+ Challenge tax avoidance schemes that claim to avoid the off-payroll working rules or otherwise reduce the tax payable
+ Use a specialist team to carry out all our off-payroll working compliance activity

Maggie Lawson, Head of Finance at ICS Accounting said: “It’s great to see more information published by HMRC on how they will support companies while everyone has time to implement the new legislation. This is a further acknowledgement from Government that there will be no repeat of last years delay and we are all systems go for the changes in April 2021.”

“The waiver of penalties should not be confused with not having to comply with the incoming legislation changes from 6 April 2021 and the relevant tax will still need to be paid.”

With only 47 days to go at the time of writing this article, there should now be no reason for end clients, agencies and contractors to delay assessing roles so they can start making the relevant arrangements to be IR35 compliant.

For more on IR35 and see how ICS Accounting can help with the upcoming changes, visit our IR35 Hub today.

The view the full HMRC paper, click here.