HMRC starts new clampdown on tax avoidance

Accountants will be aware that HMRC announced earlier this year that it plans to target private tutors as part of its clampdown on tax avoidance.

A tax protection firm has now claimed that educational establishments could become burdened down by letters from the Revenue asking for information about the people they have paid.

HMRC has sent letters to distance learning companies, language schools and other colleges asking them to provide details of all gross payments made for examining and invigilating, lecturing, teaching and tutoring, from which PAYE was not deducted, for the tax years ending 5th April 2009 to 2011.

The educational institutions must provide the Revenue with the name and address of the person paid, a description of the service provided, and the total paid and the VAT included in the payment if applicable. This requirement applies to all individuals who were paid in excess of £1,000 in any particular tax year.

A senior tax consultant at Abbey Tax, Guy Smith, explained that this could put a great administrative burden on larger institutions. One of the organisations that has received these letters has 150 colleges. That’s a tremendous amount of information to provide and for distance learning colleges it will take a lot of effort.

Smith went on to say that there are concerns that the Revenue will use this information to scrutinise tutors’ employment status and this will also affect the companies.

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