Tax avoidance strategy could 'hurt' contractor reputations, say firm

A leading business solutions brokerage company, specialising in the temporary worker and contractor sector, has suggested the government’s new tax avoidance strategy could have damaging consequences for contractors.
 
Eccleston Square Consulting Group (ESCG) believes a new policy from HM Revenue and Customs (HMRC) could have ‘unintended consequences’ for the contractor sector within the UK.
 
HMRC has written to a number of clients of contractors across the UK, demanding a full account of all individuals or companies which have been paid more than £1,000 in the last financial year.
 
The tax authority is keen to ensure contractors, freelancers and self-employed workers within the UK are fully compliant with existing tax regulations.
 
The contractor sector is not the only industry to be clamped down upon by HMRC. Last month, HMRC reminded healthcare professionals to bring their tax affairs up to date under the Health and Wellbeing Tax Plan.
 
However, ESCG feels the recent activity could have a potentially damaging impact on contractor-client relations, and threaten contractor livelihoods.
 
Jason Medcalf, director of ESCG, said: "We urge the Government to work in partnership with the contractor industry – by taking this approach we can ensure the sector is fully tax compliant while avoiding unintended consequences.
 
"Our industry is built on strong relationships of mutual trust between contractors and their clients. Our contractors spend years building their reputation as professional and responsible partners who can be relied upon to complete their work on time and to the highest standards.
 
"However, there is now a danger that if a company receives a letter enquiring about the financial dealings of a contractor, they might infer that the contractor has done something wrong.
 
"It’s important to find a way for HMRC to gather the data which they need to conduct their investigations without the risk of damaging these important relationships."

Date published 7 Apr 2014 | Last updated 7 Apr 2014