Status Disputes / Employed or Self-Employed?
Contractors and sub-contractors are particularly likely to be subject to a tax dispute with HM Revenue & Customs. A favourite area of attack by the taxman is known as a Status Dispute: where HMRC are challenging the self-employment status of sub-contract labour and are claiming that they are, instead, employees. They can be very costly in forms of extra tax, interest and penalties - if the tax officer wins.
Businesses who utilise the services of a large but self-employed labour force are vulnerable to HMRC claiming that the workers are in fact employees, and that the principal (i.e. the engager, contractor etc) is actually their employer - and then holding the engager liable for PAYE and NIC. HMRC will often attempt to re-open 6, and sometimes up to 20, years: seeking extra tax, interest and penalties. Most Status Disputes are handled by HMRC's Local Compliance SME unit's specialist Status Inspectors; although some are dealt with by the elite Fraud Investigation Service branch.
What does this mean for me?
The taxmen don't always obtain or consider all the relevant facts, and are prone to interpret the rules in their favour. They often ignore key facts and important legal issues. HMRC frequently rely on Tax Tribunal decisions which have gone their way (where the facts may be very different from your situation), whilst ignoring cases they have lost.
How Can Lynam Tax Status Dispute Specialists Help me?
Lynam Tax Experts have successfully defended many Status Disputes and tax enquiries. We have also helped businesses put in place systems and contracts which make successful challenges by HMRC much less likely. Avoiding a Status Dispute is also a good way of preventing an in-depth tax investigation.
If you are concerned about Status, or have an ongoing tax enquiry or compliance check (including Contractual Disclosure Facility investigations) then call us today for a free, in confidence, discussion.
Call Paul Lynam now: 0845 643 9997
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We specialise in managing all Tax Enquiry, Tax Disclosures & Tax Disputes with HMRC.
We will help you throughout the Tax Investigation or Disclosure and save you money, so you can concentrate on running your business and enjoying your private life.
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