HMRC forms new employment status unit

27th October 2016

HM Revenue and Customs (HMRC) has quietly revealed the creation of a new unit designed to cover the employment status of taxpayers, in a bid to more effectively tackle missed funds arising from incorrect worker classifications.

In a letter to Labour MP, Frank Field, the unit will enable HMRC to “better focus their resources” on employment status issues, stated Jane Ellison, Financial Secretary to the Treasury.

Freelance contractors potentially affected by IR35 will be interested to note the latter part of the unit’s name: “Employment Status and Intermediary” division, with its brief to combat “intermediary risks”.

However, the majority of comments from Ellison suggest that the false self-employment legislation will still be the unit’s biggest priority.

After Mr Field got in direct contact with the Treasury due to his concerns about ‘gig economy’ workers, they responded: “The government takes false self-employment very seriously.

“[It] is committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to.”

HMRC’s executive chair, Edward Troup has also written to Mr Field as a result of his concerns and insisted the tax department is “committed to tackling false self-employment”.

“We have referred [your dossier] to the appropriate compliance teams for consideration,” added Troup.

“If we find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure that they pay the appropriate tax, NICs, interest and penalties.”

Julia Kermode, chief executive, The Freelancer & Contractor Services Association, commented on the launch of the new unit by confirming she has already set up a meeting with Mrs Ellison and is keen to discuss the issues with her and hearing more about the role and objectives of the unit.

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