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HMRC outlines support for those affected by IR35 changes

16 February: HMRC has reaffirmed there will be no penalties for inaccuracies in the first year of the expanded off-payroll working rules (commonly known as IR35) in a document pledging to support taxpayers who are trying to comply.

In a new policy briefing published on 15 February, HMRC outlines its “compliance principles” for implementing the expanded off-payroll working (OPW) regime. It commits to supporting those who are “trying to do the right thing” and to helping taxpayers meet their new responsibilities and correct their mistakes.

Reiterating its advice of February 2020, HMRC confirms that it will not issue penalties for inaccuracies in the first 12 months of the regime, unless there is evidence of deliberate non-compliance.

HMRC also confirms that it will not use information it receives under the expanded regime to open new compliance enquiries into returns for tax years before 2021/22, unless there is reason to suspect fraud or criminal behaviour.

While HMRC reaffirms that it is taxpayers’ responsibility to determine whether they need to apply the rules, it may contact taxpayers to discuss how the implementation is going and will provide additional support to those that need it. This support could be a webinar, workshop or a one-to-one advice call.

The guidance states: “We’ll provide support based on our view of the employment status indicators and give advice on best practice to help you fulfil your obligations. However, we will not make employment status determinations for you or assure the status of specific engagements or processes you have in place.”

The document outlines the responsibilities that taxpayers may have under the rules and provides a series of case studies to illustrate how the rules apply in practice.

Alongside outlining support, HMRC clarifies how it will identify and correct non-compliance, with specific information on how it will challenge those taxpayers who it believes are deliberately not applying the rules.