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More than half of small businesses are yet to adhere to IR35 “off-payroll” regulations, according to a survey by accounting firm BDO. Fifty-five per cent of SMEs who use contract workers have not yet formalised processes to ensure contractors are within the rules, with many claiming they will deal with this once the pandemic subsides. IR35 was extended to private sector employers in 2021 after having been delayed in 2020 due to the onset of the pandemic. It requires employers to vouch that workers are paying the correct level of tax and national insurance and aims to eradicate “disguised employment” where organisations engage workers operating through limited companies, reducing their tax and national insurance liabilities and avoiding them having to provide basic employment rights. The government encourages employers to use its Check Employment Status for Tax (CEST) tool, but its findings have been shown to be unreliable on several occasions, leading many organisations to receive fines. Companies that do not conform to the new regulations can be investigated by HM Revenue and Customs, although HMRC has promised to grant employers a “soft landing” for the first 12 months of the regulations coming into force. This gives non-compliant employers a grace period to get their houses in order. A number of government departments have themselves come under investigation for non-compliance - most recently the HM Courts and Tribunals Service, which was hit with a £12.5 million bill in relation to incorrect assessments of workers’ employment status. John Chaplin, employment tax