The latest public-sector body to run afoul of the UK’s off-payroll rules is High Speed 2, the non-departmental body working on the high-speed rail line between London and Birmingham, Qdos reported.

HS2 paid a £6.2 million tax bill in the 2022/23 tax year, Qdos reported, citing accounts recently published by HS2.

The off-payroll working rules introduced to the public sector in 2017 made public bodies responsible for determining the tax status of the contractors they engage. It also made them liable when those decisions are incorrect.

“HS2 has fallen foul of the off-payroll rules once, landing a multi-million-pound IR35 bill. As such a significant infrastructure project, it’s no surprise HS2 relied on contractors — but clearly, it made mistakes when assessing contractors’ IR35 status,” Qdos CEO Seb Maley said in a press release. “A staggering £6.2m tax bill acts as a stark reminder of the costs of noncompliance where the off-payroll rules are concerned. It makes this already controversial project even more so.”

He said the body’s failures also raise serious questions about the HMRC’s IR35 tool called CEST, which is used to determine the IR35 status of contractors. He noted that CEST is often at the heart of incorrect IR35 assessments.

“This eye-watering tax bill serves as a lesson for other businesses engaging contractors,” Maley said. “Given the complexity and the concerns of these rules, it’s crucial that compliance is prioritised.”