First the DWP and now the Home Office - Ooops!
https://www.computerweekly.com/news/...-of-IR35-rules
HMRC hits Home Office with £33.5m bill over ‘careless’ application of IR35 rules The Home Office is the latest ministerial department to be hit with a multimillion-pound tax demand from HMRC after errors were discovered in its implementation of the IR35 rules
The Home Office has received a double-whammy of tax charges and penalties totalling £33.5m, after a review of the department’s IR35 compliance procedures by HM Revenue & Customs (HMRC) determined that it had been “careless” in its implementation of the tax avoidance reforms.
The Home Office’s 2020-2021 Annual report and accounts shows the department had its implementation of the IR35 reforms placed under review by HMRC in 2018, bringing to light a number of instances whereby the employment status of its contractors were incorrectly assessed.
Public sector organisations, such as the Home Office, have been responsible for determining whether the contractors they engage with should be taxed in the same way as permanent, salaried staff (inside IR35) or as off-payroll workers (outside IR35) since 6 April 2017.
The HMRC review determined that the Home Office had incorrectly assessed numerous contractors as working outside IR35 since April 2017, resulting in the department incurring a bill for £29.5m to cover the income tax, national insurance contributions and interest that HMRC claims was lost through these errors.
The Home Office’s 2020-21 accounts state that the department had a total of 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 consistency review at some point since 1 April 2020.
The department, which is concerned with crime prevention and controlling immigration to the UK, also incurred a further £4m penalty after HMRC determined that its application of the off-payroll rules had been “careless”.
The £4m charge was conditionally suspended for three months, the accounts confirm, to give the Home Office time to improve its IR35 compliance procedures.
“The conditions relate to meeting the Home Office’s notification and filing obligations, a 100% assurance check on all out-of-scope determinations, improved governance around the use of contractors and contingent labour,” the accounts document said.
The department has also committed to improving the training offered to hiring managers and the way it monitors compliance with the IR35 rules throughout the “life-cycle” of its contractor engagements. “The Home Office expects to meet those conditions,” the document added.
https://www.computerweekly.com/news/...-of-IR35-rules
HMRC hits Home Office with £33.5m bill over ‘careless’ application of IR35 rules The Home Office is the latest ministerial department to be hit with a multimillion-pound tax demand from HMRC after errors were discovered in its implementation of the IR35 rules
The Home Office has received a double-whammy of tax charges and penalties totalling £33.5m, after a review of the department’s IR35 compliance procedures by HM Revenue & Customs (HMRC) determined that it had been “careless” in its implementation of the tax avoidance reforms.
The Home Office’s 2020-2021 Annual report and accounts shows the department had its implementation of the IR35 reforms placed under review by HMRC in 2018, bringing to light a number of instances whereby the employment status of its contractors were incorrectly assessed.
Public sector organisations, such as the Home Office, have been responsible for determining whether the contractors they engage with should be taxed in the same way as permanent, salaried staff (inside IR35) or as off-payroll workers (outside IR35) since 6 April 2017.
The HMRC review determined that the Home Office had incorrectly assessed numerous contractors as working outside IR35 since April 2017, resulting in the department incurring a bill for £29.5m to cover the income tax, national insurance contributions and interest that HMRC claims was lost through these errors.
The Home Office’s 2020-21 accounts state that the department had a total of 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 consistency review at some point since 1 April 2020.
The department, which is concerned with crime prevention and controlling immigration to the UK, also incurred a further £4m penalty after HMRC determined that its application of the off-payroll rules had been “careless”.
The £4m charge was conditionally suspended for three months, the accounts confirm, to give the Home Office time to improve its IR35 compliance procedures.
“The conditions relate to meeting the Home Office’s notification and filing obligations, a 100% assurance check on all out-of-scope determinations, improved governance around the use of contractors and contingent labour,” the accounts document said.
The department has also committed to improving the training offered to hiring managers and the way it monitors compliance with the IR35 rules throughout the “life-cycle” of its contractor engagements. “The Home Office expects to meet those conditions,” the document added.
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