HMRC’s light touch approach to compliance with the off-payroll working (“OPW”) rules, commonly known as IR35, ended on 6 April 2022. However, a recent report by the Public Accounts Committee (“PAC”) “Lessons from implementing IR35 reforms” sets out that HMRC needs to demonstrate that the rules can be operated effectively and fairly.
The PAC report also stated that “widespread non-compliance” with IR35 tax reforms in central government departments is “not acceptable” after HMRC “rushed implementation of the reforms; provided poor guidance; and public bodies struggled with its tool to assess status”.
Prior to 6 April 2022 and except in cases of deliberate non-compliance, HMRC did not impose penalties for OPW inaccuracies before this date. From 6 April 2022, HMRC is expected to begin enforcing the rules leading to recovery of the relevant PAYE and NIC (and any Apprenticeship Levy) which is due either from the fee payer or the end client where the end client did not take ‘reasonable care’ when determining the status of the relevant engagement.