Contractors False Self Employment Status – Hiring Companies to be Fined

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Contractors false self employment
Contractors false self employment

Contractors False Self Employment Status

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UK Contractors false self employment statuses will now affect those who hire them.

Instead of the contractor being the butt of IR35, the onus will now be on companies to make sure that any freelancers that they hire are paying the correct tax.

They are aiming at the gig economy but it could potentially hit all those in self employment.

It seems that the default as ‘worker’.

For freelancers that would be a Dependent Contractor.

Genuinely in Self Employment

The company hiring would have to prove that the people they hire are genuinely in self employment.

If the company does not do this then they get a fine if they get it wrong.

Said Frank Field, the Chairman of the Commons Select Committee “It is time to close the loopholes that allow irresponsible companies to …. avoid taxes and free ride on our welfare system.”

The select committees say that fining employers would help to ensure that ‘the risks of being caught outweigh the gains companies stand to make from illegal practices’.

Contractors False Self Employment – Freelancers Avoiding Tax

It seems that there is growing concern that the ever increasing number of those in self employment, up to almost 5m now, are milking the system to avoid tax. They want to tackle what they see as Contractors false self employment.

It seems that they want companies to give employment benefits to what they see as part time workers or dependent contractors.

While this may be good news for those in the gig economy, it will not be welcomed by those such as IT contractors.

They don’t see themselves as being exploited and would prefer not to have the employment benefits.

We all know that companies are risk averse.

No Personal Service Company Contractors

Why would they allow loads of contractors to operate via personal service companies when the company could end up paying all theri taxes if HMRC feel that at least some of those contractors are not genuine freelancers?

We say what happened in the public sector when the Government put the onus on their own departments to decide the status of contractors.

Many of then decided that they would not take the risk.

They stated that they would no longer use those contractors using personal service companies.

It ended wih a whole load of contractors, locums and agency nurses dumping their limited companies and using umbrella companies.

This is yet another blow to hard working freelancers.

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