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Contractors are taking an unnecessary risk by attempting to wilfully deceive HMRC, according to CXC Global.

The international contractor management specialist has warned professionals that attempts to hide the full extent of their earnings will be severely punished. This follows reports of freelance IT consultant, Hamauon Khan - who lied about his self-employment status and earnings to avoid paying tax of more than £170,000 - being jailed for four years. HMRC and other global tax authorities are increasingly clamping down on non-compliance in order to regain lost revenue.

Michelle Reilly, Managing Director of CXC Global EMEA, comments:

“This is yet another example where the risk isn’t worth whatever reward the individual thought they were gaining. In this particular case, Hamauon Khan avoided paying taxes for a period of nine years and it’s not at all surprising that he’s been caught. While the majority of contractors do operate on a wholly compliant and legal basis, there are some that look to cheat the system. The message is simple – it’s not worth it. While the individual may have avoided paying taxes for a certain period of time, he’s now got to pay that all back and spend a lengthy time in prison.”

“This particular example stands out because of the scale of the fraud, but there are smaller cases happening every day that are increasingly being clamped down on by HMRC and other global tax authorities. There are many contractors who think it’s acceptable to operate through a non-compliant vehicle either here, or more commonly overseas and while they may make marginal gains in the short term, it isn’t worth risking the prospect of facing a very long and painful punishment at the hands of the tax authorities. The UK and a number of other countries are tackling evasion in the most severe way possible and cases continue to rise. Even companies the size of Google and UBS are under investigation in France and if they can’t get away with it, what chance does an individual contractor have? We’d urge any contractors who may think they’re either paying not enough or too much tax to get in touch with a specialist who can handle their affairs before it’s too late.”

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