Contractors could be hard hit by tax arrears

Contractors could be among the hardest hit by the recent spate of errors in tax payments, according to a firm of specialist accountants.

Six million people paid incorrect tax in the two tax years to March 2009, HM Revenue and Customs (HMRC) has announced – and the 1.45 million who HMRC say underpaid will be asked to pay a total of £2 billion in arrears.

According to reports, people who are most likely to be affected are those who changed jobs, started a new job and had an emergency tax code, only worked for part of the year, had more than one job at the same time, were made redundant – or became self-employed.

According to accountants, Simply Contracting, contractors who started their contracting career between April 2007 and March 2009 could be receiving unpleasant letters from HMRC.

So, too, could contractors who moved around and had various sources of income in that time, including those who have had relationships with several agencies where PAYE has been paid on their behalf.