A New Era of Compliance and HMRC Enforcement
The UK tax authority, HM Revenue & Customs (HMRC), announced in the Autumn Budget 2024 that it will phase in 5,000 additional compliance officers by 2029-30, forecast to raise about £7.5 billion a year in additional yield once fully trained. A further 500 officers (funded by £100 m) confirmed in the Spring Statement 2025, with recruiting starting 2025-26. For businesses using freelance talent, the message move sends a clear message: compliance moves from “back-office” to “board-room.”
Whether you're running a small or medium-sized business, hiring freelance talent, or managing complex contractor relationships, this policy shift should be a wake-up call: tax compliance is no longer a back-office concern—it’s a frontline business priority.
What’s Behind HMRC’s Compliance Push?
HM Treasury is investing £1.5 bn in HMRC’s compliance function – its biggest capacity build-up in a decade.
- Small- and medium-sized businesses: For every 1,000 small businesses in the UK, HMRC will assign an additional inspector. These businesses have been identified as key contributors to the nation’s £39.8 billion tax gap.
- Freelancer and Contractor Activity: With the rise of self-employment and flexible work, HMRC is zeroing in on sectors where non-payroll labour is common.
- Improper Claims and Errors: New officers will target: Personal purchases claimed as business expenses, misreported or under-declared VAT and undeclared income, especially cash-based transactions
A Tech-Powered Enforcement Strategy
To support these new hires, HMRC is also rolling out advanced AI and data analytics to pinpoint anomalies and flag high-risk taxpayers or businesses. These tools will automate audit targeting, increasing the likelihood of investigation, even in cases where no wrongdoing is initially suspected.
Why This Matters for Businesses Using Freelancers
If you hire independent contractors or freelancers, you may be more exposed than you think. With better data and bigger teams, HMRC will scrutinise status determination statements (SDS), “inside/outside IR35” calls, and evidence of reasonable care.
Rebecca Seeley Harris, Employment Status, Off-Payroll & IR35 Expert, gave her perspective at WorkSummit on the topic: “The fact that HMRC now has 5,000 more compliance officers, thanks to the government, means it is absolutely essential that you have not only an outsourced provision, but also a management process.”
What Businesses Should Do Now
“With 5,000 new HMRC inspectors on the way, businesses should be asking: what can we put in place now to show we’re taking compliance seriously and potentially reduce the risk of deeper investigation?” Colin McDonagh, Head of Enterprise Workforce Solutions at Worksome
Here’s how organisations can proactively prepare for HMRC’s increased focus on tax compliance:
1. Audit Your Contractor Classification
Ensure your freelancers or independent contractors aren’t misclassified. Check IR35 status & SDS quality – rerun assessments plus working-practice review; document “reasonable care”. Use an IR35-compliant framework to accurately assess roles.
2. Review Expense Claims
Establish clear policies for what counts as a legitimate business expense, especially for your contractors. Ensure you’re not reimbursing non-compliant claims.
3. Keep Impeccable Records
Detailed, transparent, and well-organised documentation, including contracts, SDS, substitution logs, invoices, and payment records, will be your best defence in case of an audit.
4. Use an IC Management Solution
Work with a trusted Independent Contractor (IC) management platform like Worksome to maintain airtight compliance processes. We automate vetting, onboarding, SDS documentation, and classification, so you can scale with confidence.
Compliance is Now a Competitive Advantage
HMRC’s investment in enforcement isn’t just about catching bad actors—it’s about reshaping how UK businesses operate. By taking proactive steps to ensure freelancer compliance, your business won’t just avoid penalties—you’ll build a reputation for operational excellence.
Want to Go Deeper on UK Tax and Compliance?
HMRC’s recruitment drive is just one signal of the UK’s evolving compliance landscape. At WorkSummit, we brought together legal, tax, and talent experts to break down IR35, freelancer classification, and how companies can stay ahead of the curve.
📚 Read the session recap: “Move Fast Without Breaking Things – Compliance in the UK”
Legal Disclaimer: The information provided in this blog post is intended for general informational purposes only. It does not constitute legal advice or create an attorney-client relationship. While we strive to provide accurate and up-to-date information, the legal landscape is constantly evolving, and laws and regulations may vary by jurisdiction.
If you require legal advice or have specific legal questions related to contingent workforces, compliance, or any other legal matter, we strongly recommend consulting with a qualified attorney who can provide advice tailored to your individual circumstances and needs.
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