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Government Departments Screw up IR35

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    Government Departments Screw up IR35

    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.
    "You’re just a bad memory who doesn’t know when to go away" JR

    #2
    Another "look how much we've brought in" claim that's actually an inter-departmental transfer.

    Comment


      #3
      Totally dumb.

      I treated my income when I contracted to the government as a massive tax rebate.
      Down with racism. Long live miscegenation!

      Comment


        #4


        what a surprise.

        The smelly thing is not your elbow!
        "If you didn't do anything that wasn't good for you it would be a very dull life. What are you gonna do? Everything that is pleasant in life is dangerous."

        I want to see the hand of history on his collar.

        Comment


          #5
          The snake is eating its own tail

          Comment


            #6
            My guess these Government departments struggled to find talent when they offered inside roles.

            They probably knew they were inside along but risked it anyway knowing the government would foot the bill if they ever got caught by HMRC.

            Comment


              #7
              So a load of outside contractors got found to be inside? On a public gig, there is a surprise... but that aside this is bad for us in the longer run that they'll tighten up controls but too far (once bitten, twice shy etc) which means where the number of Outside gigs started appearing the PS they'll sink considerably again?

              If they've found so many incorrect determinations and got paid with no effort just imagine how many outside contractors were at risk with them being responsible before this all hit.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                DWP faced with £87.9m tax bill for incorrect IR35 status determinations (peoplemanagement.co.uk)

                or has that already been posted?


                “This is a clear example of the risk involved in using online tools such as CEST to determine IR35 status. Relying on CEST alone does not demonstrate reasonable care or protect against HMRC fines.”
                See You Next Tuesday

                Comment


                  #9
                  Originally posted by Lance View Post
                  DWP faced with £87.9m tax bill for incorrect IR35 status determinations (peoplemanagement.co.uk)

                  or has that already been posted?


                  “This is a clear example of the risk involved in using online tools such as CEST to determine IR35 status. Relying on CEST alone does not demonstrate reasonable care or protect against HMRC fines.”
                  HMRC would like to say they want to have their cake & eat it.

                  I hope the lawyers make mincemeat of them.
                  "If you didn't do anything that wasn't good for you it would be a very dull life. What are you gonna do? Everything that is pleasant in life is dangerous."

                  I want to see the hand of history on his collar.

                  Comment


                    #10
                    Anyone else think moving the fines and emphasis onto the client was the best thing ever to happen since IR35 was created?

                    Makes total sense to me that the determination needs to be set by the company hiring external contractors and that they take the risk and fight the bully boys at HMRC.

                    I hope all the companies and public sector departments tie up the HMRC in endless court cases and bankrupt the ****ers.
                    I design idiot proof software. Trouble is, they keep making better idiots.

                    Comment

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