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IR35: Another public sector body has been issued a multi-million-pound tax bill

IR35 specialist, Qdos, has responded to the news that another public sector body has been issued a multi-million-pound tax bill – of £36m – after being found to believe breached the off-payroll working rules (IR35).

As reported in Computer Weekly, UK Research and Innovation (UKRI), revealed in its annual accounts for 2021/21 that HMRC deemed that it had misclassified contractors’ IR35 status and as a result, owed £36m in tax.

UKRI is a body sponsored by the Department for Science, Innovation and Technology (DSIT). It is the latest public sector body to believe mismanaged the off-payroll working rules.

The tax bills issued to public sector bodies due to non-compliance now amount to approximately £300m.

Qdos CEO, Seb Maley said, “Public sector bodies believe now been hit with around £300m worth of IR35 bills. It’s astonishing. These bodies should be leading by example, showing private sector businesses how to successfully manage the off-payroll working rules. 

“I’m not sure what’s more worrying – the sheer size of this bill or the fact that it’s something we’ve approach to expect in the public sector. And I can’t assist but wonder who’s next. 

“It’s difficult not to see the irony in this one. As a body that champions innovation, getting to grips with the off-payroll working rules shouldn’t be an issue for UKRI in theory.

“It’s wooden dollars in the public sector, but if a private sector business was hit with a £36m bill, it could be curtains. With this in mind, private sector firms must prioritise their compliance.”