ESM10036 - off-payroll working legislation: Chapter 10, ITEPA 2003 (from 6 April 2021): basic principles: HMRC compliance approach
The compliance approach
HMRC are delivering a comprehensive programme of education and support to help customers prepare for the off-payroll working reform. HMRC are committed to continuing to take a supportive approach to help customers apply the new rules.
HMRC has committed not to use information acquired as a result of the changes to the off-payroll working rules to open new compliance checks for previous tax years. HMRC wants to reassure workers that their intermediary entity will not be subject to new compliance checks using information from the off payroll working reforms for tax years prior to 6 April 2021, unless HMRC has reason to suspect fraud or other criminal behaviour.
This includes Status Determination Statements (SDS) which may have been prepared for the tax year beginning 6 April 2020.
HMRC will also not ask contractors, agencies or engagers for any SDS that may exist relating to the tax year 2020-21, as evidence in ongoing enquiries. However, HMRC may use the information if it is provided.
HMRC will ensure that customers trying to comply with the off-payroll working rules are not disadvantaged by those who are not. HMRC will focus on and address the most significant risks around non-compliance. HMRC will always follow up on suspected non-compliance if there is a sign of potential criminal activity.
HMRC will raise awareness of the risks of using avoidance schemes and arrangements with individuals, end-clients, employment agencies and intermediaries. A self-help guide will be published shortly for contractors and agency workers on how to avoid entering into non-compliant arrangements.
To underline this supportive approach, HMRC will take a light-touch approach to penalties and customers will not have to pay penalties for inaccuracies relating to the off-payroll working rules in the first 12 months unless there is evidence of deliberate non-compliance.
HMRC has also published details of its future compliance strategy which can be viewed at the link below: