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The Home Office is the latest government department to fall foul of the government's own IR35 laws. Following on from the Department for Work and Pensions’ IR35 transgressions coming to light, leading to a £87.9m payment having to be made to HMRC, the Home Office has now found the employment status of its contractors have been wrongly assessed. Since 6 April 2017, public sector organisations have been responsible for establishing how contractors should be taxed and whether they are essentially employees who should be inside IR35 or off-payroll workers. [pullquote]What we are now seeing is a consequence of the false promises that HMRC made to parliament in the lead up to the roll out of the off-payroll legislation” – Dave Chaplin, CEO, IR35 Shield[/pullquote] An HMRC review has found that the Home Office should pay £29.5m to cover the income tax, national insurance contributions and interest that it estimates was lost through these errors in assessing contractors' status. According to the Home Office’s 2020-21 accounts, the department had 216 off-payroll workers on its books as of 31 March 2021 who were earning at least £245 a day, and 90 of them had their IR35 status changed following a review at some point since 1 April 2020. The department has put in place training for managers and improvements in the way it monitors compliance with the IR35 rules. It had also been made subject to a £4m penalty after HMRC determined that its application of the off-payroll rules had been “careless”, but this was subsequently suspended.IR35
Government department pays £87.9m to HMRC for IR35 failings Does IR35 spell the end of contract work?
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