Contractors face HMRC fines and penalties

More than a third of UK contractors have received a fine from HM Revenue and Customs, often due to missing deadlines or failing to understand their obligations.

According to research from umbrella company, Paraplus, 37 per cent of contractors have received an HMRC fine or penalty which equates to nearly 600,000 UK workers. Furthermore, more than half of the 2,000 contractors surveyed (55 per cent) say they struggle to understand HMRC guidelines, leaving up to 880,000 contractors facing similar confusion.

An analysis of the results showed that the two main concerns contractors face are HMRC submissions and generally understanding HMRC guidelines. Nearly half (42 per cent) of contractors say their biggest concern about working for themselves is understanding and adhering to HMRC guidelines.

The expenses and what can and cannot be claimed is another headache for contractors.

Phil McDonald, Managing Director of Paraplus, said: "Unfortunately these findings aren't surprising as the regulations and constant updates from HMRC can be confusing, especially if you're not an expert.

"HMRC doesn't consider ignorance to be an excuse, so those workers who have already been fined or might be, are at risk. The survey also found that a huge 54 per cent of contractors don't know or are unsure of what they can claim as an expense – this is a notoriously confusing area and should be a wakeup call to contractors."