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HMRC confirms 12-month ‘soft landing’ for IR35

19th February 2021

HMRC has published a new document outlining its IR35 compliance strategy, which will be introduced on 6 April 2021.

Emphasising its advice from last year, the tax authority confirmed it will not issue fines for inaccuracies in the first year of the scheme, unless there is evidence of deliberate non-compliance.

HMRC added that it will not use information acquired due to the changes to the off-payroll working rules to open a new compliance enquiry into returns for tax years before 2021/22.

Medium and large firms in the private sector will be affected by the new rules. The reforms will shift the responsibility for determining employment status from the contractor’s personal service company, to the organisation engaging them.

HMRC said:

“Small non-public sector organisations are not affected by the changes, and the contractor’s company or other intermediary remains responsible for determining if the off-payroll working rules apply and paying the relevant tax.

“Workers and agencies may ask small non-public sector organisations they contract with, to confirm that their organisation qualifies as ‘small’.”

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