HMRC guidance on IR35 reforms confirms that previous tax years will not be investigated where there is no suspicion of fraud

22 November 2019

With IR35 / off-payroll working reforms dominating so much of the news, and contractors worrying about its potential implications, guidance published by HMRC will prompt widespread relief from affected parties.

A HMRC issue briefing confirmed, “HMRC has taken the decision that they will only use information resulting from these changes to open a new enquiry into earlier years if there is reason to suspect fraud or criminal behaviour”. This means that there will be no punishments or additional fees for contractors if they have genuinely misinterpreted whether they are classed as ‘inside IR35’ or not and there will be no repercussions for them in relation to previous tax years. The new legislation will simply apply to them from the beginning of the new tax year should their engager not be deemed as being small.

It does signify, however, that if a contractor has knowingly falsely classified themselves as not being ‘inside IR35’ when they should have been, and so should have been processed via payroll then there may be some investigation into previous tax years and potential consequences.

CIPP comment

 The CIPP is aware of the implications that the new IR35 reforms will have, both on contractors and their end engagers. To help individuals prepare, we are offering both a webinar and a half-day training course providing information on the topic. The next webinar is running on 9 December 2019 and the next available course is being held on 11 December 2019 in Manchester.


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