Changes to the IR35 regime (i.e. extension to the private sector), come into force from 6th April 2021, which means that affected companies should be reviewing or otherwise will need to review their relationships with contractors and consultants, as we have previously discussed in our article 2021 – Issues and cases in employment law that will shape this coming year.
The Government accepts that it is complicated and according, HMRC will not fine employers for accidental IR35 errors in the first year. HMRC has released the following statement:
“We will not charge a penalty if you took reasonable care to apply the off-payroll working rules correctly but still made a mistake, including making mistakes in status determinations”.
HMRC will encourage companies to “self correct” errors. However, this is not HMRC going soft. Indeed, confirmed that it may investigate situations where there is evidence of deliberate non-compliance”.
There are plans for a “name and shame” process, with the intention of encouraging companies to “get their tax affairs in order”. However, the HMRC have also said that they will only do this “when it is right to do so.”
In our view, it is imperative to deal with this now, so as to minimise the risk of any errors, which could be very costly, ultimately.