HMRC's crusade against contractors is 'far from over'

The HMRC crusade against so-called 'disguised employment' is far from over, as the tax man continues to target the contracting sector.

New data shows that HMRC is seeking to generate an extra £29.7m from investigations into whether contractors have the correct employment status, according to national accountancy group UHY Hacker Young. The data refers to tax under consideration which is an estimate of the maximum amount of extra tax HMRC believes it could collect before investigations have been concluded.

Mike Crellin from UHY Hacker Young, said: "HMRC's crusade against contractors is far from over.

"HMRC is looking at employment status extremely closely. These estimates show that HMRC thinks there is more revenue that could be squeezed out of the compliance work in this area. Contactors can expect HMRC to continue to take a very tough line.

"Just this year HMRC introduced the controversial loan charge to claw back up to 20 years of backdated tax from business, including contractors who reduced their tax liabilities through tax planning schemes.

"IR35, the legislation targeting people who wrongly register as self-employed to reduce their tax and NIC, is going to be extended to the private sector next year which will likely create more confusion about the employment status of contractors. This is likely to see more mistakes being made – and more fines."