The Telegraph: “HMRC flexes new powers on contract and freelance workers in £5.5bn raid”

osborne_2853802bThe truth about HMRC’s abuse of powers against “low hanging fruit” freelance workers is starting to come out.
The Telegraph published a comprehensive article on the topic in its September 21st edition.
Read it here

The comments section is also worth a visit.

One reader summed up pretty accurately where exactly contractors caught in the APN farce are coming from:

“Interesting the volume of comments here by people who don’t have any clue as to why this all happens, i.e, non contractors. Those who are glad to see contractors being targeted here clearly don’t know the full facts.
As a contractor you are forced, yes forced by your client to open up a limited company to trade because they will NOT employ you directly, that’s to stop them from paying tax. You cannot negotiate this, if you don’t do it you don’t work. So then you contact HMRC and say “Hi, how much tax should I pay as a contractor” and they say “errm, it’s not as simple as that, err you have to fill in a self assessment.” So then you go to an accountant and say “Hi, how much tax should I pay” and they say “errn,it’s not quite as simple as that, there’s actually no tax construct for you being a contractor, most people just open up a limited company, but actually you shouldn’t because IR35 says you are actually just a disguised employee, err but just pay yourself dividends and some income.” So then someone comes along and says, you know what, HMRC can’t be bothered to stop the companies that employ you from forcing you in to this, and they cant be bothered to set up a contractor based tax position either, and the way you are trading is actually against HMRC direction anyway (IR35) and we have a simple way of getting paid which doesn’t involve loads of paperwork and is under law perfectly acceptable, AND you get to take more money home, then why the funk wouldn’t you do it? The annoyance is that HMRC could stop this overnight by either setting up a contractor related tax structure OR just stopping the companies who employ us from not paying us directly OR targeting those offshore companies offering the service are not being cracked down on or have any regulation put on to them.

What’s even more comical is that the money we collect and pay to HMRC in VAT and corporation tax is much more than HMRC would get as tax from us as an individual, AND if they make us go bankrupt they will lose a huge amount of future VAT and tax because we will never be employed again. Why make someone bankrupt for £30k when they will make you a million over there lifetime if you let them continue to work?? Added to which most contractors are doing this because they are some of the best people in their industries, and the country will lose the top people who are making this country successful and are in turn paying for all of the average low paid losers who took out a mortgage they can’t afford and are being bailed out by the country.”

HMRC has a very deep responsibility in contractors moving to DOTAS structures en-masse in the early 2000’s. Today, they are complaining about a situation they themselves created.

There is something in there for psychologists!