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Cabinet Office to pay £38.5 million IR35 settlement

By Drooid · Oct 15, 2026, 12:13 PM UTC · How we work

Summary

Story summary

The Cabinet Office will pay £38.5 million to settle unpaid IR35 tax on its contractors.
HMRC ruled in October 2025 that the Cabinet Office’s historic IR35 processes were inadequate.
Management approved an expedited settlement in February 2026.
The Cabinet Office paid HMRC £15 million on account.
A £23.467 million provision remains, with a possible penalty of up to £8.9 million.

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Story summary

The Cabinet Office will pay £38.5 million to settle unpaid IR35 tax on its contractors.
HMRC ruled in October 2025 that the Cabinet Office’s historic IR35 processes were inadequate.
Management approved an expedited settlement in February 2026.
The Cabinet Office paid HMRC £15 million on account.
A £23.467 million provision remains, with a possible penalty of up to £8.9 million.