HM Revenue and Customs have set off on a £5.5bn tax haul on the country’s freelancers and contractors.
After being granted more power last year, HMRC are now set to demand billions in unpaid taxes, stretching back years.
Much of the campaign will be aimed at freelancers formerly using employment benefit trust schemes.
Pay now, question later
Before the new powers came about, HMRC were forced into lengthy court hearings to recover owed money, however, they’re now able to enforce payment within a 90-day deadline with subsequent appeals an option.
Refunds will only be given at a later date if it appears the calculations were wrong – as they were when they fined a scaffolder £1 million when he actually owed £11,000.
Since the new accelerated tax demands began in August 2014, HMRC is estimated to have collected around £1bn.
Not just the rich and famous
Despite the campaign initially being aimed at multi-millionaires, including Premier League footballers, it appears the less well-off are now receiving much of the attention.
Around 64,000 demands will be sent between now and 2020, with IT and finance workers set to receive letters relating to work they completed several years ago.
The bulk of the freelancers affected will reportedly be earning £60,000 to £80,000 and the sums demanded from them will likely be in excess of their yearly pay.
‘Employment benefit trust’ controversy
Though now widely controversial, ‘employment benefit trust’ schemes were aimed at freelancers as a cost-effective alternative to setting up a limited company.
Many of those who took part in the schemes were contractors in the IT and financial services sector, and whilst they were a legal way of avoiding tax, HMRC is now considering it ‘particularly aggressive’ tax avoidance.
Is HMRC right to demand payment from freelancers from years ago? Or are they punishing honest mistakes? Let us know in the comments below!