UK's HMRC gains £800m by bogus self-employment clampdown UK's HMRC gains £800m by bogus self-employment clampdown

UK's HMRC gains £800m by bogus self-employment clampdown
19 Feb 2018

Payroll investigations in the UK yielded more than £800 million (US$1,122 billion) last year following a clamp down on organisations that incorrectly classify workers as self-employed.

According to Personnel Today, Her Majesty’s Revenue & Customs (HMRC) brought in an extra £819 million (US$1,149 billion). Recovered by the tax authority’s employment status and intermediaries team, which was set up to investigate businesses declaring a high number of self-employed workers, it amounted to 16% more than the additional tax generated the previous year.

The crackdown is part of wider measures by the government to target firms that use self-employed status and the ‘gig economy’ moniker to avoid paying tax and national insurance contributions.

The information, disclosed by HMRC following a Freedom of Information (FoI) request, also revealed that investigations into the payrolls of large firms yielded £503 million (US$706 million) in additional tax last year, an increase of 31% from £383 million (US$537 million) the year before. Investigations are often based on tip-offs and complaints of alleged mistreatment of self-employed workers.

Paul Noble, head of tax investigations at law firm Pinsent Masons, which submitted the FoI request, said: “HMRC has made no secret of its suspicions of how companies classify their workers. Considering the scale that the gig economy has grown to, it is no surprise that it is now under intense scrutiny by HMRC.”

As well as the broader brush investigations by which HMRC aims to collect millions of pounds at a time, it is also “combing carefully through the minor details of payroll”, which means “even the most trivial of expenses are now being investigated”, he added.

Because HMRC finds it more productive to target employers and intermediaries rather than individual workers, Noble advised firms to keep up to date with current tax initiatives and PAYE systems.

The Government’s Good Work plan, published last week, is based on recommendations made in the Taylor Review of Modern Working Practices.

Payroll investigations in the UK yielded more than £800 million (US$1,122 billion) last year following a clamp down on organisations that incorrectly classify workers as self-employed.

According to Personnel Today, Her Majesty’s Revenue & Customs (HMRC) brought in an extra £819 million (US$1,149 billion). Recovered by the tax authority’s employment status and intermediaries team, which was set up to investigate businesses declaring a high number of self-employed workers, it amounted to 16% more than the additional tax generated the previous year.

The crackdown is part of wider measures by the government to target firms that use self-employed status and the ‘gig economy’ moniker to avoid paying tax and national insurance contributions.

The information, disclosed by HMRC following a Freedom of Information (FoI) request, also revealed that investigations into the payrolls of large firms yielded £503 million (US$706 million) in additional tax last year, an increase of 31% from £383 million (US$537 million) the year before. Investigations are often based on tip-offs and complaints of alleged mistreatment of self-employed workers.

Paul Noble, head of tax investigations at law firm Pinsent Masons, which submitted the FoI request, said: “HMRC has made no secret of its suspicions of how companies classify their workers. Considering the scale that the gig economy has grown to, it is no surprise that it is now under intense scrutiny by HMRC.”

As well as the broader brush investigations by which HMRC aims to collect millions of pounds at a time, it is also “combing carefully through the minor details of payroll”, which means “even the most trivial of expenses are now being investigated”, he added.

Because HMRC finds it more productive to target employers and intermediaries rather than individual workers, Noble advised firms to keep up to date with current tax initiatives and PAYE systems.

The Government’s Good Work plan, published last week, is based on recommendations made in the Taylor Review of Modern Working Practices.

Leave a Reply

All blog comments are checked prior to publishing