HMRC in 'softly-softly' approach to contractors

The taxman is increasingly adopting a 'softly-softly' approach towards contractors, opting for letters, telephone calls and informal meetings instead of formal notices.

Issuing the warning, tax advisers said the new tactic from HM Revenue & Customs "could lull people into a false sense of security" when dealing with its officials.

The advisers, enlisted by freelance trade body PCG, said one taxpayer had even received a letter concerning his IR35 status after he met with HMRC to discuss VAT.

Nothing regarding contracts or working arrangements was said to have been discussed at the meeting, which the taxpayer agreed to for help on VAT and expenses payments.

It is clear, then, that despite IR35 facing a review, contractors should keep "vigilant" because HMRC appears to be pushing for meetings with an "ulterior motive."

"Advisers have seen an increase in the 'softly-softly' approach, where HMRC will send a letter - or even telephone – rather than issuing a formal notice", PCG added.

"Replying in the wrong way can cause a lot of time consuming headaches later on and any dispute should therefore be handled by a qualified expert".