HMRC set to clamp down on false employment status | KPMG | UK
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HMRC set to clamp down on false employment status in the ‘gig economy’

HMRC set to clamp down on false employment status

HMRC have set up an ‘Employment status and intermediaries’ team to tackle the potential false employment status of workers in the ‘gig economy’.


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Following concerns around certain employment practices, HMRC have set up a specialist employment status and intermediaries team. Their remit is to take “all necessary steps” to ensure that companies are paying the correct amount of tax and NIC, which will include both interest and penalties if applicable. The move is intended to clamp down on those companies operating in the ‘gig economy’ who, for whatever reason, incorrectly classify their workers as self-employed.

Employment practices at large companies are coming under increased media scrutiny of late. The decision to create a specialist team at HMRC comes in the wake of a letter from Frank Field MP to Jane Ellison, financial secretary to the Treasury, raising his concerns about the alleged “[chronic] low pay and poor working conditions” at certain companies. Incorrect classification of workers is estimated to cost the Exchequer £300m a year in unpaid Employer’s NIC, as well as restricting the workers’ access to statutory employment rights.

Given the press focus on this issue and the expanding role of the ‘gig economy’, it is no surprise that HMRC intend to focus their efforts on this sector. Companies can expect HMRC to scrutinise the employment status of their workers more frequently in the future.

Whilst the main focus of this article has been on employment status, there has been some speculation that this unit may also be involved in regulating the new IR35 legislation requiring public sector bodies to ensure workers employed through personal service companies pay the correct tax from April 2017.


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Patrick Martin

Ian Goodwin

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