HMRC investigation

Industry body PCG today issued a statement branding HMRC’s latest tactics to tackle tax avoidance “alarming”, as it is revealed the taxman has been asking the clients of freelancers and contractors to disclose financial and personal details for use as evidence of tax avoidance.

HMRC’s requests, which are being sent to businesses engaging smaller suppliers, includes company name, VAT Registration number, National Insurance number and even Passport details of professionals under contract.

The requests appear designed to specifically exclude larger businesses, as HMRC are only investigating contracts up to a value of £350,000 – a tactic PCG have claimed is “[targeting] independent professionals while purposely excluding large consultancies.” To justify their focus on micro-businesses, HMRC point to recent ONS data showing the explosive growth of the sector.

Chris Bryce, PCG’s CEO, said of the discovery:

“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.

“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.”

Photo by Okko Pyykkö