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HMRC Snooping On Self-Employed Contractors, PCG Warns

by Jason Gorringe,, London

17 March 2014

PCG, an organization which represents UK freelancers, contractors and independent professionals, has condemned the UK tax authority HM Revenue and Customs's (HMRC's) new campaign which targets the UK's smallest businesses by requesting detailed information from their clients on all payments made to them under a contract for services.

PCG says it has learned that letters to clients include requests for a wide range of sensitive information from the clients including the supplier's name; the 'worker' name, if different; VAT number; passport number or National Insurance number; and details of any amounts paid. HMRC has only requested information on payments of up to GBP350,000 (USD581,700).

The campaign appears to seek to tackle grey economy activity, to ensure that persons obliged to register for VAT do so, and to ensure income is fully declared. The UK value-added tax (VAT) registration threshold is currently GBP79,000.

Chris Bryce, PCG's CEO, argued: "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."

The Organization said HMRC appears to be using recent data from the Office of National Statistics, which points to a rise in self-employment over the last few years, to justify this new tactic. PCG said the initiative is penalizing the sector for its success. "Independent professionals contributed GBP95bn to the UK economy in 2013. This figure is continually rising as more and more people choose to start their own business and this can only be good for our economy."

"Considering that the Prime Minister, David Cameron, recently told PCG that he believes small- and medium-sized enterprises are the very lifeblood of our country and of local communities across the land, we are deeply concerned about this unwelcome development."

"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 penalized for the way they choose to work," he concluded.

TAGS: individuals | compliance | Insurance | VAT registration / deregistration | tax | business | value added tax (VAT) | United Kingdom | tax authority | contractors | professionals | self-employment | services | VAT compliance matters

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