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£9bn tax evasion crackdown will include self-employed focus

The Government will raise £9bn over the next five years by cracking down on tax avoidance and evasion, Chancellor George Osborne has declared.

In last week’s Autumn Statement, Osborne said the Government will tackle the growing number of intermediaries which “disguise employment as false self employment”, and act to end the “abuse” of dual contracts, derivatives linked to profits and share buy backs.

Osborne said it is the largest package of measures to tackle the issue so far this parliament.

The Autumn Statement says: “The Government will legislate to level the playing field so that companies cannot use employment intermediaries to disguise employment as self-employment and thus avoid employment taxes and deny employment rights to their workforce.

“This will take effect from April 2014 and raise around £400m each year.”

The Government also announced that where a scheme is found in court to be a tax avoidance scheme, anyone who used that scheme will be penalised.

The Autumn Statement says: “When there has been a relevant decision HMRC will issue a notice to all users of the scheme in question requiring them to amend their return or advise HMRC why they believe they should not. A tax-geared penalty would be charged if they failed to amend their return and it was subsequently found the scheme failed on the same point of law.”

Association of Chartered Certified Accountants head of taxation Chas Roy-Chowdhury says: “Many businesses will try to mitigate their national insurance contributions.

“The Government has been taking steps towards classifying more people as employed in recent years and this is another step in that direction – but there is a risk it will go too far and penalise the genuinely self-employed.”

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