Umbrella company contractors and freelancers beware! HMRC may send debt collectors to your door if you owe taxes.
In a deal believed to be worth £70 million, debt collectors will be employed to bring in an additional £1.35 billion each year in outstanding tax. In this latest purge, even those owing small amounts will be targeted.
The Revenue ran a pilot scheme last year in which it targeted Self-assessment taxpayers owing more than £10,000, as well as people who had PAYE debts outstanding before 2007 and those who owed up to £700 in National Insurance.
It seems slightly strange that HMRC should employ more debt collectors. Based on the pilot scheme, it produced a report that questioned the effectiveness of debt collectors. Concerns were also raised about unsavoury practices. An additional cause for concern is that criminals may pose as debt collectors and scam taxpayers into parting with money.
This new crackdown has sparked outrage in certain quarters. The MD of Cheap Accounting, Elaine Clarke, is furious that taxpayer’s money is being spent in this way, especially as HMRC has bungled people’s PAYE coding notices recently. She pointed out that vulnerable people, such as pensioners, could owe tax and they will be terrified if debt collectors come knocking on their door.
Tax coding notices for the 2011 -12 tax year will be sent out shortly and many people could find they are to lose up to £120 a month from their income as the Revenue tries to correct its previous errors.
As Robin Williamson from the Low Incomes Tax Reform Group pointed out, tax codes are confusing and people would be advised to make sure their code is correct or run the risk of losing yet more income.
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