HMRC ramps up gig economy crackdown – 16 per cent jump in compliance take from investigations into payroll and expenses

Over £800m collected from payroll investigations

HMRC collected £819m in additional tax through payroll investigations over the last year – up 16 per cent on 2015/16 (£705m) – as its clampdown on the ‘gig economy’ continues, says Pinsent Masons, the international law firm.

Tax generated by HMRC through payroll investigations specifically into large businesses generated £503m last year, up 31 per cent from £383m in 2015/16.

HMRC views the use of self-employed workers by some companies as a method to avoid paying the full amount of National Insurance. As the “gig economy” has spread HMRC has stepped up the intensity of investigations into businesses that it believes are using “hidden employees”.

Edward Troup, the former Executive Chairman of HMRC, confirmed that specific complaints re “gig economy” businesses had been passed to HMRC, and Government Ministers have also called for HMRC to look at “gig economy” businesses.

Pinsent Masons says that HMRC has also set up Employment Status & Intermediaries teams and an ‘employer compliance review programme’ to combat companies wrongly classifying workers as self-employed.

Paul Noble, Head of Tax Investigations at Pinsent Masons, says: “HMRC has made no secret of its suspicions of how companies classify their workers.

Considering the scale that the gig economy grown to, it is no surprise that it is now under intense scrutiny by HMRC.”