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19 Feb 20211 minute read

12 month grace period for IR35

ECAtoday
12 month grace period for IR35

Employers that accidentally fall foul of the changes to private sector IR35 rules coming into force this year will not face any fines for the first year, the government has announced.

Guidance published by HMRC this week confirmed that the tax authority would be lenient with employers for the first 12 months of the new off-payroll rules – including in cases where the wrong tax determination is made. This is in line with the ‘light-touch approach’ promised by chancellor Rishi Sunak last year.

“We will not charge a penalty if you took reasonable care to apply the off-payroll working rules correctly but still made a mistake, including making mistakes in status determinations,” the guidance said, adding that, unless there was evidence of deliberate non-compliance, HMRC would encourage employers to “self-correct” errors before considering whether it needed to intervene further.

ECA Members can access a wide range of industry-specific guidance on IR35 and how it can affect electrotechnical and engineering services businesses. Visit this page for more information.