Friday, 21 March 2014

HMRC Targets Freelancers


PCG, the organisation which represents the UK’s freelancers, contractors and independent professionals, reports that HMRC has undertaken a campaign which targets the UK’s very smallest businesses by requesting detailed information from their clients on all payments made to them under a contract for services.

The letters request a wide range of sensitive information from the clients including the supplier’s name, the ‘worker’ name if different, along with VAT number, passport number or National Insurance number and details of any amounts paid.

In a move PCG believes is designed to avoid bringing larger suppliers into scope, HMRC has only requested the information on payments of up to £350,000. According to PCG’s CEO, Chris Bryce, this instance of HMRC choosing to target independent professionals while purposely excluding large consultancies is yet another example of one rule for small companies and another for big business.

Chris Bryce said:
There is simply no justification for HMRC to write to clients requesting detailed information on the working practices of their suppliers. Especially when you consider that they are doing so with absolutely no evidence of any wrongdoing.

For any business, it would be incredibly damaging to have HMRC writing to their clients to insinuate that the way they are doing business may not be legitimate. For the smallest businesses, where client relationships are key, this is especially harmful.”
HMRC appear to be using recent data from the Office of National Statistics which points to a rise in self-employment over the last few years in order to justify this new tactic - something PCG believes is penalising the sector for success.
Independent professionals contributed £95billion to the UK economy in 2013. This figure is continually rising as more and more people choose to start their own business and this can only be good for our economy.
Considering that the Prime Minister, David Cameron, recently told PCG that he believes SMEs are the very lifeblood of our country and of local communities across the land, we are deeply concerned about this unwelcome development.
Waging a campaign against these enterprising individuals by targeting them via their clients is anti-business. What’s more, to use the success of the sector as an excuse just isn’t acceptable. Independent professionals should be celebrated, not penalised for the way they choose to work.”
It seems that HMRC is targeting the smaller fish, because it knows that they are easy pickings.

Tax does have to be taxing.

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3 comments:

  1. The Muppet Show will be working to a script with a variety of considerations and/or risks factored in;
    In a recession more people and businesses will avoid or evade tax merely to survive;
    SME's are less likely to possess the technical ability or finaces to challenge HMRC rulings;
    Somewhere, a risk model will have identified the risks associated with particular trades, probably based on an algorithym conjured from its IT systems (trouble being the systems dont talk to each other so reality factors are likely to have been omitted from the mix...;
    If you go for an easy target having previously identified them and set them as goals it will be easier to trumpet achievement and even exceed targets than taking on the bigger players with the inherent risk of losing and not being able to tick the right boxes - this is what happens when you allow the player to set its own targets!
    Then, as always, from a bean counters perspective, there will be the short-term gains from hitting the SME's where the pickings are much easier.
    Not withstanding, always view with a jaundiced eye HMRC's tales of revenue protected or loss prevented - this is their version of a piece of string and they hold the roll, the scisssors and the measuring tape.
    Finally, this is somewhat of a scattergun approach and could be easily contended as a fishing expedition on HMRC's part and in effect has the traders veryfying and undertaking work possibly deemed the responsibilty of HMRC. A very effective and efficient method if you have got less staff and less money to tackle compliance, get the good old taxpayer to do it instead, unpaid of course.
    Statler & Waldorf would have a field day!

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  2. "HMRC's tales of revenue protected or loss prevented" - would this be a reference to Future Revenue Benefit whereby they take a wild stab at how much their inspections protected for the next three years and count it as an unbelievably large part of the amount of revenue brought in?

    I challenge anyone to build a hospital with that money.

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