IR35 Compliance Missteps Continue: Natural Resources Wales Faces £19 Million Fine

Just when it seemed that significant IR35 fines in the public sector were tapering off—with HMRC expected to shift focus to private sector organisations—a new, substantial penalty has come to light.

The Welsh government recently confirmed a settlement with HMRC estimated at around £19 million involving Natural Resources Wales (NRW) and their practices for engaging specialist contractors. This settlement encompasses unpaid taxes, penalties, and interest.

As Wales’ environmental regulator, NRW is tasked with responsibilities such as managing forestry, flood response, and environmental permitting. It now faces potential financial exposure due to alleged IR35 misclassifications, with discussions still underway regarding the final settlement amount, which could ultimately rise further. In a statement, NRW remarked, “We continue to discuss this matter and the extent of the potential liability that may be owed to reach a resolution.” HMRC has declined to comment on the case.

The incident underscores the critical importance of proper IR35 compliance measures. This latest fine follows a similar case involving HS2, where contractors were engaged through a third-party service provider. HS2 assumed that the provider would handle the contractors' IR35 tax determinations, an assumption that resulted in a tax bill of £6.2 million when HMRC classified the arrangement as a labour supply rather than an outsourced service.

How CoComply Can Help You Stay Compliant

At CoComply, we understand the challenges businesses face in managing complex supply chains and ensuring IR35 compliance. Our innovative platform integrates with the government-recommended CEST tool and helps organisations achieve confidence in contractor engagements and avoid costly penalties. Our proprietary technology enables you to:

• Identify in-scope contractors from HR and Procurement channels.

• Determine the end client within the supply chain.

• Conduct regular assessments of in-scope contractors, safeguarding compliance from every angle.

• Offers you centralised reporting and reassessments whether you use CEST, CoComply or another for Ir35 assessments 

With CoComply, you can effectively manage IR35 responsibilities, realise cost savings, and prevent misclassification fines. Don’t leave compliance to chance—let CoComply’s expertise guide your organisation in achieving IR35 accuracy.