Letters to End Clients by HMRC

Succeeding their many, many warnings and promises of further ‘clamp-downs’, HM Revenue & Customs have seemingly ventured down another controversial route to target Limited Company contractors.

Reportedly, letters are now being issued by the customs to contractor’s end clients, calling for detailed information regarding all payments made to them under a contract for services.

In addition, the letter contains requests for a wide range of sensitive data, including the worker’s name – if different to the given supplier name – the supplier’s VAT number, passport number or National Insurance number.

However, HMRC’s new method has unsurprisingly attracted criticism, as the data-grab appears to target smaller businesses only.

As the letters only require information associated with payments of up to £350,000, they seem to have been designed to avoid bringing large suppliers onto the custom’s radar.

Many have taken the view that this action has proved that, as far as HM Revenue & Customs are concerned, there is one rule for small businesses and another for larger ones.

Some of the outcries have accentuated the lack of justification HMRC have for requesting personal data, especially as there is no evidence of any particular wrongdoing.

For any business, it would not only be insulting, but potentially very damaging to have HMRC write to their client to insinuate their practices are not legitimate. In doing so, the customs are blemishing the working relationship and putting an individual’s trustworthiness and credibility into the grey area.

For the smallest businesses, this is especially harmful as client relationships are massively important.

Some individuals speculate that HMRC are attempting to justify their recent actions by using ONS data, which shows a spectacular rise in the number of self-employed.

In contrast, smaller businesses have recently been coined by David Cameron as the ‘very lifeblood’ of the UK. These intrusive data requests, however, convey that this sector is being penalised for its success.

Evidently, using the renowned success of a sector to instigate further probes is not acceptable. Independent professionals should be celebrated, not surrounded with sceptical ambiguity. 

By:Sam Greenwell

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