Over 50,000 contract workers have been subjected to backdated tax demands of hundreds of thousands pounds. This is after a pursuit put in place by a controversial loan charge aimed to claim back-unpaid taxes from as far back as 1999.
The HMRC are using the Loan Charge to demand tax they say was avoided using disguised remuneration schemes. This involved paying worked using tax-free loans from offshore trusts. By paying the workers through the loan, employers did not need to pay income tax or national insurance contributions.
The 2016 Budgets, announced that freelancers who had used the legal loophole would face a retrospective tax bill on their income since 1999. This has been predicted to bring the HMRC £3.2billion before the repayment deadline falling on 31st January.
The backdated tax bill has been reported to be causing ‘widespread anxiety and distrust’; as well as being linked to five suicides. It has been predicted that many may become bankrupt.