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IR35 could end up costing contractors £30 million

Contractors in the UK could end up paying HMRC a total of nearly £30 million in tax by the time its investigations under the reformed IR35 system are finished.

This sum represents the maximum estimated amount that the UK’s contractor workforce could be required to pay back under the new loan charge. When it introduced the reforms to tighten the legislation on the use of limited companies, by contractors seeking to cut their tax, HMRC applied them retroactively from 1999, leaving many contractors who used these companies facing huge backdated tax bills

Speaking to Accountancy Age, UHY Hacker Young director, Mike Crellin, stated that HMRC is absolutely set on pursuing these workers for what it considers to be two decades of tax avoidance, before adding:

“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. Contractors can expect HMRC to continue to take a very tough line.”

News of this estimated sum being sought by the tax department comes in the wake of a rise in the number of investigations that it is conducting into sectors that have high rates of freelance contract workers.

The TV industry is one of the first and this has led to high profile cases of actors and presenters fighting HMRC in court over IR35 charges. Many freelancers will look to contractor accountants in Wirral or wherever they are based for help in dealing with this situation.

Posted by Louise
August 12, 2019
IR35

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