Taxman writes to limited companies' clients

The taxman is targeting limited company contractors by requesting detailed information from their clients on all payments made to them under a contract for services, PCG is warning.

According to the contractors’ trade group, letters sent by HM Revenue & Customs to end-users request a “wide range of sensitive” data, ranging from supplier name to the sums paid.

The HMRC letters are also said to demand the worker’s name – if different to the supplier name – the supplier’s VAT number, passport number or National Insurance number.

But the data-grab appears designed to avoid bringing large suppliers onto the Revenue’s radar, as the department is only seeking the information on payments of up to £350,000.

Chris Bryce, PCG’s chief executive, condemned such an approach, saying it proves that, as far as HMRC is concerned, there is one rule for small business and another for big business.

“There is simply no justification for HMRC to write to clients requesting detailed information on the working practices of their suppliers,” he said. “Especially when you consider that they are doing so with absolutely no evidence of any wrongdoing.

“For any business, it would be incredibly damaging to have HMRC writing to their clients to insinuate that the way they are doing business may not be legitimate. For the smallest businesses, where client relationships are key, this is especially harmful.”

He believes that HMRC appears to be using recent ONS data showing a historic rise in self-employment to justify its new tactic of confronting their clients with data requests.

So rather than supporting SMEs, recently hailed by Prime Minister David Cameron as the “very lifeblood” of the UK, Mr Bryce fears the sector is being penalised for its success.

“Waging a campaign against these enterprising individuals by targeting them via their clients is anti-business,” the PCG boss said, referring to the PM’s own criticism of the Labour Party.

“What’s more, to use the success of the sector as an excuse just isn’t acceptable. Independent professionals should be celebrated, not penalised for the way they choose to work.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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