Britain's tax collection agency is clamping down on umbrella companies used by contractors to pay their dues, with 10,000 outstanding tribunal cases waiting to be heard.
"With a large number of umbrella companies suspected of VAT avoidance, the tax tribunal backlog has grown massively in a very short time," Steven Porter, a partner at the law firm said in a statement to"Contractors looking to sign up with an umbrella company should be aware that it is likely the umbrella company will be required to pay VAT. HMRC will view any claims to the contrary with suspicion," he added.
Contractors found to be within the scope of the legislation – i.e. inside IR35 – will have to pay more tax than they might expect.
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