HMRC Now Bigger Worry for Freelancers than Brexit
Freelance professionals across the country are more worried about HMRC’s attitude towards them than they are about any potential impact from Brexit.
That’s according to new research that suggests over 80 per cent of freelancers and contractors consider issues with HMRC to be the biggest potential threat facing their business activities in the coming year.
Only 11 per cent of the 1,000 people who were asked recently cited Brexit as the issue that concerns them most professionally as they look ahead to the next 12 months.
For a significant proportion of freelancers and contractors there is a fear that HMRC effectively has an agenda against them.
The insurance and tax advisory firm Qdos carried out the research on these issues and concluded that “many contractors feel that HMRC sees them as a soft target”.
An issue that has had a particularly acute impact on freelancers and potentially impacted their views on HMRC is the loan charge, which has left significant numbers of self-employed people suddenly facing sizable tax bills relating to income received up to 20 years ago.
Meanwhile, HMRC is changing the IR35 rules around off-payroll contracting, which could see thousands of self-employed people have to switch from paying taxes via their personal companies to paying tax at the same rates as regular employees.
Those rules come into effect from April 2020 and will mean that companies with 50 employees or more will be responsible for assessing what the official employment status should be of someone they hire as a contractor.
Expectations among some business lobbies are that the introduction of those new rules will potentially lead to a lot of extra contractual issues and red tape for self-employed people across the country.
Seb Maley, chief executive of Qdos, told the Financial Times: “While HMRC’s treatment of contractors is concerning, we have noticed that many private sector firms recognise the importance of independent workers and are, contrary to reports, prepared to engage them outside IR35 when reform is enforced next April.”
HMRC is quoted as saying: “The reforms [to IR35] don’t stop people working through their own companies; they help ensure the right tax is paid.
“The changes ensure consistency in the administration of the off-payroll working rules across all sectors.”
