HMRC updated its guide to making a voluntary disclosure on 15 October 2026. If you disclose an employment status or off-payroll working error, you now need to confirm two things: that you have checked whether other workers are affected, and that you have taken reasonable steps to stop it happening again. You can only do both if you know who is working for you.
Organisations engaging contractors may discover employment status or off-payroll working errors. Working practices may change, a required status determination may have been missed, or the nature of a supplier arrangement may not have been properly considered. Where an error cannot be corrected through the appropriate existing process, a voluntary disclosure may be necessary. HMRC says penalties are usually lower where a taxpayer discloses voluntarily. But the updated guidance makes clear that a disclosure is not just about the one worker you found.
What does HMRC's updated disclosure guidance ask for?
The guidance covers three kinds of employment status error: treating someone as self-employed who should be an employee, not applying the off-payroll rules correctly to a worker engaged through an intermediary, and any status decision that led to PAYE being underpaid.
Where an employment status disclosure is appropriate, email [email protected]. Explain why you are making the disclosure. For each affected worker, provide their name, National Insurance number, job title, the dates affected and the Income Tax, National Insurance and, where it applies, Apprenticeship Levy due.
You also need to confirm that you have:
- Checked if any other workers are affected. An error may indicate a wider process issue, so review other potentially affected engagements rather than assuming the problem is isolated
- Taken reasonable steps to prevent similar errors happening again. Record the steps taken to address the underlying cause as well as the individual error.
Both confirmations depend on knowing your full contractor population. That includes people engaged through agencies, consultancies and suppliers further down your supply chain. We set out how to build that list in How to find every contractor in your organisation, and look at why the number is so often incomplete in Hidden headcount: why automotive and aviation companies are most exposed.
What does this mean if you engage contractors?
Small engagements still count. The off-payroll rules have no minimum value or length. A short, low-value engagement still needs a status determination, and it still counts when HMRC asks whether other workers are affected.
Reasonable care needs evidence. Under the off-payroll rules, a medium or large client must take reasonable care when it decides a worker's status. That means an informed decision, based on how the work is really done, with records to back it up. See what reasonable care means for IR35.
Without reasonable care, the liability stays with you. Where the client fails to take reasonable care in making a status determination, it may be treated as the deemed employer for the relevant tax liabilities. That means the Income Tax, National Insurance and Apprenticeship Levy due, plus interest and possibly penalties. HMRC's general disclosure guidance refers to penalties of up to 100% for certain UK tax inaccuracies. Whether a penalty arises depends on the facts and applicable penalty rules; taking reasonable care can mean no inaccuracy penalty, even where tax remains due. We cover the wider picture in the consequences of IR35 non-compliance.
What should you do before you disclose?
Work through these steps so you can confirm both points with confidence:
- First check whether the error can be corrected through the appropriate payroll or RTI process; HMRC says it will not accept a voluntary disclosure where you could have corrected the error yourself
- List every contractor engaged in the same way, through the same supplier or by the same team
- Check each one has a status determination based on how the work is really done
- Look further down the supply chain for workers supplied through consultancies or service contracts
- Find the cause: a missing step, a team that bypassed the process or a supplier that was never checked
- Fix the cause and record what you changed, who owns it and when it will be reviewed
- Keep the evidence together so you can show HMRC what you checked and when
If you engage people through suppliers that call themselves consultancies, check those too. We explain why in Who is responsible for IR35 when your agency calls itself a consultancy?
Good workforce compliance starts with visibility. Know who is working for you, how they are engaged and be able to prove the checks were done.
CoComply is an external workforce compliance platform. It helps large organisations see their whole external workforce, classify each engagement and keep the evidence that shows reasonable care.
Next step: Our external workforce governance guide sets out how to build oversight of your whole external workforce.
Frequently asked questions
What changed in HMRC's voluntary disclosure guidance in October 2026? HMRC updated its guide on 15 October 2026. For employment status and off-payroll errors, you must confirm you have checked whether other workers are affected and taken reasonable steps to prevent similar errors.
Where do you send an employment status disclosure? By email to [email protected], with each affected worker's details and the tax, National Insurance and Apprenticeship Levy due.
Do low-value contractor engagements need a status determination? Yes. The off-payroll rules have no minimum value or length, so every in-scope engagement needs a determination.
Will we pay a penalty if we disclose? HMRC says penalties are usually lower for voluntary disclosures. Whether a penalty applies depends on the facts. Taking reasonable care can mean no inaccuracy penalty, even where tax is still due.
