Gig economy crackdown yields 16% more payroll tax

HMRC recovered an additional £819m from investigations into payroll taxes last year, up by 16% from the previous year, according analysis by Pinsent Masons, which suggests the gig economy clampdown is a factor in the increase

In addition, payroll tax investigations by HMRC's large business directorate yielded £503m, up 31% from the £383m collected in 2015/16, the figures showed.

Paul Noble, tax investigations expert at law firm Pinsent Masons, said: ‘Considering the scale that the gig economy has grown to, it is no surprise that it is now under intense scrutiny by HMRC.

‘As well as its broader brush investigations in which HMRC aims to collect millions at a time, it is also combing carefully through the minor details of payroll. Even the most trivial of expenses are now being investigated.’

The statistics provide evidence that it was much more productive for HMRC to target employers and intermediaries, rather than to pursue individual workers, Noble said. Employers should therefore ‘ensure that they keep up to date with HMRC initiatives and proactively review their PAYE systems’.

The government is currently considering whether to introduce a statutory test of employment status for tax purposes as one of four consultations announced earlier this month as part of the government’s ‘good work’ proposals.

Report by Pat Sweet

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