Innocent until proven guilty by HMRC?

You have chosen to be a contractor and this is not  ‘second best’ to being employed. Well not according to a majority of 73% of those becoming self-employed in the last five years, a report by the Resolution Foundation found, who say they prefer being self-employed to any other way of working.

It’s because you want to be your own boss, be flexible with the choice of location of your next contract, choose when and where to work, enjoy the variety of different contracts and hopefully reap the benefits when you work harder.

Whatever your reason, you see a bright road ahead; no longer having to put up with a boss you dislike, the hassles of a typical 9-5 job, the commute to work in heavy traffic, no one breathing down your neck.

But be warned, life as a contractor may not be as rosy as planned.  HMRC has doubled the amount of tax investigations held in just the past year alone, which has raised concerns that making an innocent mistake could make you a target.  With the number of self-employed people investigated quadrupling in this time, you need to ensure that your tax affairs are in order.

Not only has HMRC brought their total of investigators to more than 1,600 but they are creating special ‘task forces’ especially to investigate contractors and freelancers amongst others.  They are on a mission to win back the estimated £35bn a year of lost tax!

Many contractors feel that they have nothing to hide, being totally innocent, which may well be the case however what will you do if you receive a letter from HMRC?  How will you present your information to them ensuring your innocence and giving you the best possible chance of a successful defence? Have you got the time to deal with this whilst working hard as a contractor? How will you deal with the stress involved?  

There are many insurances in the market to choose from to cover you in these instances, Qdos in particular, who have just released an IR35 defence pack, alternatively you could, of course, choose ‘second best’ and become an employee!!

By:Jane Hailstone

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