HMRC crackdown on gig economy collects £819 million in tax

In the tax year 2016/17 HMRC have reportedly collected £819 million in additional tax through payroll investigations, which is an increase of £114 million on 2015/16.

It has been reported that HMRC’s Employment Status and Intermediaries team are responsible for this increase, which was set up in order to avoid paying tax and national insurance contributions. The HMRC team acted on intelligence and complaints about alleged misused of self-employed workers.

HMRC have focussed on the gig economy as they believe that many companies are falsely classifying their workers as self-employed to avoid paying tax and national insurance, as well as avoiding employee rights such as holiday pay and sick pay.

The gig economy has been under pressure with many companies being brought to tribunal by individuals believing they were employees or workers incorrectly engaged under a self-employed contract. The most high-profile case involving Pimlico Plumbers will be heard in the Supreme Court in 2018.

It is clear that employment status and the gig economy is an area of concern for Government as last week they published their response to the Taylor Review stating they are looking into legislative reforms in relation to employment status definitions. Too see Aspire’s summary of the response click here.

Aspire Comment

HMRC are taking an aggressive stance regarding the gig economy and worker status. Therefore, it is important that workers are correctly classified to avoid having to backpay tax and National Insurance. It is not sufficient to have a worker sign a self-employed contract if  working practices indicate that they are employed.  If you are unsure about worker status please contact Aspire at enquire@aspirepartnership.co.uk or call 0121 445 6178.