Tax avoidance clampdown could bankrupt thousands
HMRC’s clampdown on tax avoidance by freelance workers could result in thousands facing bankruptcy, with the Revenue demanding sums of up to £900,000. HMRC is seeking money owed by almost 100,000 contractors who used “disguised remuneration” and similar schemes that avoided paying NI or income tax. The contractors, most of whom work in IT or healthcare, claim they were duped into believing that the schemes were within the law. However, their arguments have cut no ice with HMRC, which is adding hefty penalty charges and interest rates to the amounts owed - often more than doubling the value of the debt. Graham Webber, director of tax at WTT Consulting, who is representing 2,000 contractors facing retrospective demands, estimates that 40% of his clients will go bankrupt. An HMRC spokesperson commented: "These schemes are, and were always, tax avoidance. They used contrived transactions to bend the rules of the tax system to gain a tax advantage that parliament never intended."
Source: The Times (28/04/2018)