HMRC is using powers, initially aimed at aggressive wealthy tax avoidance schemes, to demand £5.5BN from thousands of contractors and freelancers. HMRC is demanding that the backdated taxes be paid, in full, within a three-month deadline.
The Telegraph reports that HMRC’s powers to demand “accelerated payments” are being used to target more moderately well-off individuals, who are only now being told to pay back-taxes from jobs they held years ago.
Among them is freelance IT technician Mr Adams (not his real name), who since April has received three demands totalling £27,900 from a job he held seven years ago.
In the event that it later found that he was innocent of using an “aggressive avoidance” scheme, he will get a refund. In the meantime he has to find the money within months.He is quoted:
“The latest deadline I’ve been given is the end of SeptemberBetween 2008 and 2010, Mr Adams freelanced at various banks in London, during this time he received a letter from HMRC telling him it was looking into his tax affairs, and saying it would “let him know” if anything was untoward.
If I don’t get the money, I’ll go bankrupt.”
Five years of silence followed. Mr Adams considered the matter closed. That was before April, when HMRC’s “accelerated payments team” gave him three months to pay the £27,900.
HMRC’s brief notification in 2010 was enough to open an “inquiry” meaning it can sidestep rules ("schedule 39") that impose a four year time limit (six if HMRC proves you were careless, or twenty if you are a "deliberate" avoider) on demanding back-taxes.
An HMRC spokesman said:
“Anyone who can’t pay should talk to us as soon as possible and we will do all we can to help, such as a suitable payment arrangement.”Mr Adams has now attempted to set up a payment plan with HMRC, but has been told the money owed will be passed to a debt collector if he doesn't pay up within nine months.
Low hanging fruit is always the easiest to harvest!
Tax does have to be taxing.
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