HMRC uses new powers on contractors and freelancers, telling people to 'pay now, argue later'.
According to the Daily Telegraph, thousands of contractors and freelancers have become ensnared in a £5.5bn tax grab – aimed initially at wealthy tax dodgers – that allows HM Revenue & Customs to demand backdated taxes to be paid, in full, within a three-month deadline.
The allegedly underpaid tax can relate to periods of employment from many years ago.
HMRC was handed the powers last year to force wealthy investors accused of using “aggressive tax avoidance” schemes to pay their potential tax liabilities up front, instead of having to chase them through the courts.
Previously, HMRC was forced to pursue its missing billions in costly court battles, prompting the Government to approve the legislation in 2014.
It was initially aimed at wealthy people involved in so called tax avoidance schemes but evidence suggests that HMRC’s powers to demand “accelerated payments” are being used to target more moderately well-off individuals – who are only now being told to pay back-taxes from jobs they held years ago.
HMRC has, for years, retained the right to go after these taxpayers for tax allegedly underpaid. Among them is freelance IT technician Mr Adams (not his real name), who since April has received three demands totalling £27,900 from a job he held seven years ago.
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