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Tax avoiding freelancers targetted in latest HMRC push

HM Revenue and Customs has ordered £1bn in repayments from freelance workers who have hidden their real earnings using loan schemes, according to The Times.

Freelancers ranging from IT staff to NHS locums are being pursued for the unpaid tax, the paper reports, after at least 20,000 contractors had been found by the taxman to have their national insurance and income tax debts had been disguised through their wages being collected by offshore umbrella schemes in return for non-repayable loans.

The schemes date back as far as 1999. HMRC tells the paper that while they can return the unpaid tax in instalments, it expects the average of £50,000 in underpayments for each freelancer to be returned in full.

HMRC has set a deadline of September 30 for the further 30,000 contract workers it believes used such schemes to come forward and save themselves additional charges.

The Times reports that management consultants and other business services sector workers are the most affected, accounting for 65 per cent of those that used the schemes, with construction workers making up around 10 per cent of those affected.

HMRC tells the paper that two thirds of those who opted for the schemes were earning at least twice the average wage and stayed in the schemes for at least two years.

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