The army of freelancers who work in the marketing industry are facing a major HMRC crackdown in a move which could spark a “triple whammy” of soaring costs for both freelancers and employers as well as a potential “brain drain” in the sector.
According to a report in The Sunday Times, Chancellor Philip Hammond is planning the raid in an effort to bring in an extra £1bn in revenues which, he claims, will level the playing field between salaried staff and freelance workers, who pay their own tax.
Many businesses in the sector – including agencies, suppliers and brands – employ freelancers across their operations, including creatives, IT and data professionals. As well as providing greater flexibility, it also means businesses do not have to have these often highly experienced professionals on the payroll, who would otherwise cost a small fortune.
The Treasury plans to target freelancers who are paid through “personal service companies”, who currently pay their own tax and National Insurance contributions. HMRC believes many of these workers avoid paying the correct amount.
The crackdown would place the onus on employers to ensure freelancers pay their contributions. Those deemed not to be “proper freelancers” would be forced to join the payroll.
A similar scheme has already been introduced for public sector workers. The head of the Freelancer & Contractor Services Association told The Sunday Times: “It’s been shambolic. We’ve seen skill shortages in public bodies because they have lost such huge numbers of contract workers.”
The latest IPA Agency Census shows that up to 10% of the staff in its member agencies are freelance workers.
One industry insider told Decision Marketing: “This could be a disaster for many businesses in the industry. There are huge benefits in employing freelancers. Every agency has its own bank of them and, increasingly, brand owners are using contractors, too. Freelancers shore up the industry and can bring years of experience at the fraction of the cost of employing them full-time. If this crackdown goes ahead, in one fell swoop the industry could lose years of expertise.”
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