The offer of a soft landing for businesses and contractors in the roll out new tax rules has been blasted as woefully inadequate.

HMRC said it would take a light touch approach to dishing out penalties of those who fall foul of off-payroll working rules, known as IR35, and offer a package of measures to help with its rollout when it comes into force on April 6, following a review by the Government.

The legislation is designed to prevent individuals from setting up a business and paying lower rates of tax through it, when they are effectively in full-time employment with a company. The rules already apply to the public sector.

Warnings have already been issued that the rules will put huge numbers of contractors working on the Sellafield site and for BAE Systems in Barrow in the firing line.

The Government said it had taken on board concerns raised during its consultation with businesses, tax professionals and contractor representatives, but insisted it would push ahead with the April launch.

It said businesses will not have to pay penalties for inaccuracies in the first year, except in cases of deliberate non-compliance; while HMRC has published detailed guidance on the reforms and vowed to “ramp up” communications through online guides, webinars and support to help contractors to get their head around the new rules.

Financial Secretary to the Treasury Jesse Norman said the measures would help contractors and businesses to implement the IR35 changes smoothly.

“It is only right that the off-payroll rules are applied consistently across all sectors,” he said.

“Two people sitting side-by-side doing the same work for the same employer should be taxed in the same way.”

The CBI said the review finally provided some clarity. It also welcomed an announcement by HMRC that is will commission research to measure the impact of IR35 six months after coming into force.

Its director of economic policy, Annie Gascoyne, said: “HMRC have clearly listened to business and recognise how vital it is to educate and communicate with those who might be effected however, for many this comes very late in the day.

“The six-month review will be an important marker to test whether the policy is having the desired effect.

“It’s important that the review includes a full and comprehensive impact assessment, properly assessing the admin burden for business and the impact on labour market flexibility.”

She added: “This policy cannot be the end of the road. There have been too many sticking plasters over the years and a holistic review of the employment tax system needs to be undertaken at the earliest point practical.”

Several accountancy firms in Cumbria have alerted contractors to the impact of IR35.

Paul Hornby, managing director of JF Hornby based in Ulverston, has previously warned the rule change could contractors in “serious financial trouble if they have been living lifestyles in line with earnings which soon may take a serious hit”.

“There are so many people in this area who are working 40-hour weeks at the likes of Sellafield or BAE as contractors and they are right in the firing line with IR35,” he said.

The Government estimates non-compliance with off payroll working rules is to reach £1.3 billion a year by 2023-24, depriving public services of vital funds.

It has also stressed it valued the vital role that the self-employed have in the UK labour market.