Firms warned over HMRC plans to launch new employment status unit

Businesses across the country are being urged to ensure they are entirely transparent about any workers they employ, after HMRC confirmed it is launching a new specialist unit to investigate employment status.

Employment lawyers have issued the warning following the news that the taxation body is to launch the new unit, which will work to ensure that individuals are not being misclassified as self-employed. Companies could be withholding employment protection from such workers by making use of agency staff or calling them self-employed, according to the body, and it aims to stamp out these practices.

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Financial secretary to the Treasury, Jane Ellison, confirmed the launch of the new unit to Labour MP Frank Field last week, sparking the warnings from employment lawyers that businesses ensure they are entirely honest about the employment status of all their workers.

Partner at law firm Constantine Law, Christopher Tutton, said: "The implications of failing to [ensure that workers and employees are receiving their statutory rights, such as the national minimum wage and holiday pay] could be HMRC investigations and fines, class action litigation from workers on their books and significant reputational damage."

“The government has cracked down on the tax implication of false self-employment in the last few years, by requiring agencies to treat agency staff as employees for tax purposes. However, the false self-employment rules did not mean that agency workers were treated as employees for the purposes of employment law protection," added Mr Tutton.