Debt Advice

Investigations into payroll arrangements among companies across the UK brought in over £800m to the Treasury during the 2016/17 tax year. Ben Cowgill at The Insolvency Experts provides further information.

Use of self-employed contractors

The figure represents a rise of 16% compared with the previous tax year and is believed to reflect an increased focus within HMRC on issues relating to company payrolls and self-employment. HMRC now has an established team of specialists which focuses on various employment statuses and the use of self-employed contractors across a variety of industries. Investigations specifically into businesses and their use of self-employed professionals is understood to have led to the discovery of numerous instances of alleged misuse of self-employed workers. Amounts recovered by HMRC as a result of these enquiries are known to be worth in excess of £800 million for the tax year 2016/17 because of a freedom of information request which saw those details released publicly by the UK tax authorities.

Intense scrutiny of the gig economy by HMRC

HMRC’s clampdown on the use of what is sometimes called ‘hidden employees’ reportedly saw £503 million recouped from large companies during the most recent tax year, which represents a notable increase compared with the figure of £383 million recouped from large companies for the same reasons during the year 2015/16. The issue of ‘hidden employees’ and the tax implications for businesses that rely heavily on self-employed individuals have been the subject of considerable political and HMRC scrutiny in recent months. HMRC makes no secret of its suspicions as to how companies classify their workers and considering the scale that the gig economy has grown to, it is no surprise that it’s now under intense scrutiny by HMRC. As well as its broader brush investigations in which HMRC aims to collect millions at a time, it is also combing carefully through the minor details of payroll. Even the most trivial of expenses are now being investigated. For advice on this or anything else to do with your business, in financial distress or not, contact our team at The Insolvency Experts now on 0300 303 8284 or via our contact us page