HMRC expected over 50,000 individual freelance contractors to have come forward before the end of September which was the deadline to avoid additional charges for individuals who have fallen foul of tax avoidance schemes.
Freelance workers including NHS doctors and IT professionals have been already ordered to pay back over £1 billion in unpaid tax after their true earnings were disguised for years in avoidance schemes.
The scheme allows the contractors financial affairs to be managed by offshore based umbrella schemes who collect wages on their behalf and pay them in ‘non repayable loans’, that hide the National Insurance and Income Tax liabilities. So, instead of the contractor paying the correct amount of Income Tax and National Insurance they pay much less. In most of the schemes the freelancer will only pay 10% or sometimes 5% of their wages, the remaining wages would come to them tax free.
Many contractors bitterly contest the clamp down claiming they were assured the schemes were legitimate when they signed up to them with the promoters explaining that they were legally approved by tax barristers.
HMRC’s position is that they had signed up to a scheme which was simply too good to be true and they were motivated by greed.
What is clear is that HMRC are now in the process of covering unpaid tax and are sending out accelerated payment notice letters to the individuals concerned. It is for the individual to pay the demand from HMRC or possibly face bankruptcy for another insolvency solution such as an Individual Voluntary Arrangement (IVA).
Some individuals with HMRC liabilities have been in schemes for many years. It is not uncommon for the revenue to demand several hundreds of thousands of pounds from these individuals, who have often earned six figure sums over the course of many years and retained 90% of that money due to being in an avoidance scheme.
If your debts are mounting up due to bills for unpaid or mispaid tax, it is vital you seek advice from an experienced solicitor at the earliest opportunity who can talk you through options to manage or reduce your debts. Get in touch with Farleys today on 0845 287 0939 or submit your enquiry online.