A major brokerage company specialising in the temporary worker and contractor sector has raised warnings over the Government’s new strategy to cut down on tax avoidance.

Eccleston Square Consulting Group (ESCG), one of the UKs most trusted organisations which represents various providers in the recruitment and consultant sector, has warned that a new policy from Her Majesty’s Revenue and Customs could have unintended consequences for the contractor industry in the UK. In recent weeks HMRC has written to the clients of a very large number of contractors nationally, asking for a full account of all individuals or companies which have been paid more than £1000 in the last financial year.

HMRC’s increased attention has come on the back of the growing number of contractors, freelancers and self-employed workers in the UK, in a bid to ensure that each of these groups is fully compliant with current tax regulations.However, ESCG believes that the recent activity could have a potentially damaging impact on contractor-client relations, and threaten contractor livelihoods.ESCG Director Jason Medcalf said: “We urge the government to work in partnership with the contractor industry – by taking this approach we can ensure the sector is fully tax compliant while avoiding unintended consequences.

“Our industry is built on strong relationships of mutual trust between contractors and their clients.  Our contractors spend years building their reputation as professional and responsible partners who can be relied upon to complete their work on time and to the highest standards. However, there is now a danger that if a company receives a letter enquiring about the financial dealings of a contractor, they might infer that the contractor has done something wrong. It’s important to find a way for HMRC to gather the data which they need to conduct their investigations without the risk of damaging these important relationships.”