Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to tackle disguised employment practices in the hair and beauty sector.

HMRC is committed to ensuring that the tax system operates fairly and efficiently and creates a level playing field for compliant businesses. Most businesses pay what they owe but a minority fail to register with HMRC or only declare a portion of their earnings. This minority deprive our vital public services of funding, affect fair competition between businesses, and place unfair burdens on everyone else.

We are committed to tackling false self-employment and will investigate evidence suggesting businesses have misclassified individuals for tax purposes. In these cases, we will take steps to ensure they pay the right Income Tax and National Insurance contributions.

HMRC is making it increasingly difficult for businesses to hide their earnings and have an extensive range of powers, including information gathering powers, that help build a picture of risk and identify those who are trying to abuse the system. Our approach to tax compliance includes a range of activities that aim to both detect and tackle current non-compliance and change future behaviours. Their activities include national campaigns and specialist task forces that incorporate intensive bursts of activity in targeted sectors and locations across the UK. This includes providing customer education highlighting the importance of keeping accurate records. However, we will not hesitate to use stronger sanctions against customers who deliberately choose not to comply, including potential criminal prosecutions for the most serious cases involving tax evasion.

We recognise that some customers can find it hard to understand their tax obligations, so we are developing and testing new educational material to better explain the rent a chair model to make it easy for them to get things right and intervening early to reduce mistakes. We are planning for this to be ready for publication on GOV.UK in the spring. We are continuing to work on updates to the Taxable Persons manual and these will be published in due course.