HM Courts & Tribunal Service has been given a significant IR35 bill becoming the third Government body to fall foul of the rules.

Part of the Ministry of Justice (MoJ), HM Courts & Tribunal Service has been handed a bill for £12.5 million for failing to follow the off-payroll rules correctly.

Revealed in it’s annual report for 2020/21, the costs related to mistakes made when determining the IR35 status of contractors it engaged between 2017 and 2020.

All of these errors were made after the IR35 reform was introduced in the public sector in April 2017 and continued throughout this period.

In fact, in just the last tax year, HM Courts & Tribunal Service’s had two losses of over £300,000, one of which was the result of an incorrect IR35 decision.

This is not the first time a government department or agency has been caught out by the rule change, with both the Department for Work and Pensions (DWP) and Home Office paying bills of £87.9 million and £33.5 million respectively.

The Home Office, in particular, was fined £4 million for what was described as a “careless” implementation of IR35 reform.

Both the DWP and the HM Courts & Tribunal Service said they had used HMRC’s own HMRC’s Check Employment Status for Tax (CEST) tool to determine contractors IR35 status, raising further questions about the effectiveness of this service.

The revelations of IR35 errors within the Government itself have left many asking how private companies are expected to comply with the rules, with fewer resources and expertise.