HMRC announces “soft landing” for IR35 – but don’t get complacent!

23 Feb 2021

HMRC have announced that they will allow businesses a “soft landing” for the first twelve months of the new “off payroll working” rules (IR35) when they start on 6 April.  They have said that they will be taking a “supportive compliance” approach to the new rules.  What this essentially means is that businesses will not have to pay penalties for inaccuracies in the first 12 months relating to the “off payroll” working rules, regardless of when the inaccuracies are identified, unless there’s evidence of deliberate non-compliance.

While this news is to be welcomed, it is certainly not a signal that businesses can relax and safely ignore the rules for another 12 months.  HMRC will still be undertaking compliance activity throughout this period and while there will not be any penalties for genuine mistakes, they will still look to penalise deliberate non-compliance.  This seems likely to extend to those who ignore the rules altogether – given the information published and the long lead time for the changes, it would be difficult to plead ignorance in this situation.  If HMRC see businesses making the effort to be compliant then they will still adopt a light touch approach if those businesses do not get it right first time, but we would still expect they will come down hard on those businesses they find ignoring the rules or only paying lip service to them.

Soft landing or not, businesses still need to make every effort to be compliant – be assured HMRC will be targeting non-compliance – and if they suspect a business of wilfully ignoring the rules then the consequences will still prove to be very expensive.

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To help you check on your preparations for the changes to IR35, we have created the IR35 hub where you will be able to find helpful resources and information.

Click here to find out more.

Read more in our IR35 series

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