Contractor tax warning issued

A warning has been issued by HM Revenue & Customs (HMRC) regarding contractor tax, urging people to discontinue the habit of cash payments.

Self-employed people and contractors often request payments to be made in cash so they can avoid paying certain contractor taxes on their income.

But Dave Hartnett, permanent secretary for tax at HMRC, has highlighted the unfair nature of this kind of behaviour, especially in the current economic climate. Indeed, it will only enhance the need for the government to make spending cuts and drag out the current difficulties.

Speaking to the Daily Telegraph, he observed: “Tax provides the funding to run the country: hospitals, schools and everything else. Every time someone pays cash in order not to pay VAT, the nation gets diddled.

“Cash has been a problem for a long time. The people who are worried about it should use our whistle-blowing line to tell us. We are getting better and better at finding people who receive cash.”

Mr Hartnett added that people who are avoiding tax payments have no right to complain about the current austerity measures in place.

People who are struggling with high contractor tax payments can find many ways to lower their liability legally, through umbrella companies for example, without resorting to dodging tax all-together through cash.