Partner Article

HMRC puts contractors under the spotlight

The tax system has always struggled to deal with ‘freelancers’ – particularly in the IT industry.

Often they don’t fit neatly into either the ‘employed’ or ‘self-employed’ category, and typically they will work for large businesses but with a degree of independence not enjoyed by most employees. There are a couple of developments on the horizon for this important group.

First, a deadline of 31 January 2014 for final returns for tax year 2012-13 for those caught by the IR35 legislation for personal service companies.

Second, HMRC has had a recent success in the tax tribunal in a case where ‘loans’ received by a contractor were held to be taxable income. Buoyed up by this success, HMRC is now likely to turn up the heat on other users of loan arrangements. It has already put out a warning on the ‘spotlight’ pages of its website.

Contractors – you have been warned!

This was posted in Bdaily's Members' News section by Baker Tilly .