Taxman sets up employment status unit

The taxman has quietly set up a new unit dedicated to employment status, partly to more effectively tackle exchequer risks arising from worker mis-classifications.

Disclosed in a letter to Labour MP Frank Field, the set-up of the unit will allow HMRC to “better focus their resources” on employment status issues, wrote Jane Ellison, financial secretary to the Treasury.

Ominously for contractors potentially affected by the Intermediaries legislation (IR35) is the latter part of the unit’s name -- “Employment Status and Intermediary” division, and its brief to combat “intermediary risks.”

But all of Ms Ellison’s other comments to Mr Field, who got in touch with the Treasury due to his concerns about ‘gig economy' workers, more strongly suggest that the false self-employment legislation will be the team's bigger priority.

“The government takes false self-employment very seriously,” the Labour MP is told, having approached ministers about the employment practices of Hermes UK.

“[It] is committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to.”

Edward Troup, HMRC’s executive chair has also written to Mr Field and -- in light of his concerns -- has assured him the department is “committed to tackling false self-employment.”

"We have referred [your dossier] to the appropriate compliance teams for consideration," Mr Troup writes.

“If we find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure that they pay the appropriate tax, NICs, interest and penalties.”

The HMRC chair’s comments refer to a dossier that the Labour MP put together showing what he called “evidence of chronically low pay and poor working conditions” at Hermes.  

The Guardian, which consistently reports Mr Field’s concerns about the “human underbelly of Britain’s labour market”, understands that HMRC’s new employment status unit will investigate “complaints about alleged abuses of the rules around self-employment.”     

Editor’s Note: Related Reading -

May orders employment status probe

PM’s employment review endorsed, with caveats

IR35 ‘should be up to contractors, post-Brexit’

Oct 25, 2016