This Morning host Eamonn Holmes is being chased by HMRC for millions of pounds.
The tax authority is challenging the pay Holmes gets from ITV through his own limited company. If Holmes is found to be in breach of IR35 rules, it is thought that his tax bill could be as much as £2 million.
The TV host says that if he loses the case, other ITV stars will be targeted next.
“They’ve reinvented the rules. I am the test case. If they win against me they will go after everyone else, everyone. Ant and Dec will be next,” Eamonn told The Mail On Sunday.
“The country is broke and they are coming to get us. I was in court in Central London for a week in June. I’ve been freelance for 28 years and that’s been okay. Now they’ve said it’s not okay.”
50,000 contractors affected
Holmes is not alone. BBC presenters paid in the same way – including Christa Ackroyd – have already been targeted by HMRC. A further 50,000 self-employed workers are also expected to be hit by HMRC’s loan charge next year.
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Recent reforms mean that contractors now face retrospective tax bills for using what were once thought to be legitimate ways of reducing tax. One of the more popular methods was the use of employee benefit trusts, where contractors allowed their financial affairs to be managed by offshore-based umbrella schemes. These schemes collected wages on the contractor’s behalf. They then paid them in non-repayable loans, hiding national insurance and income tax liabilities.
“These arrangements, known as ‘employee benefit trusts’, were widely accepted as legal and most were declared to the taxman. Accountancy firms, including Grant Thornton and KPMG, marketed similar schemes,” said a report by The Telegraph.
“A statement from HMRC in 2010 effectively outlawed them and most contractors left their schemes, thinking that was the end of it. But they were mistaken.”
Last year, HMRC won a legal battle against Scottish football club Rangers. Not only did it pursue the club’s employers and employees for unpaid tax, but it also changed the law and introduced a loan charge.
“Coming into play in April, this will levy massive charges on any contractors who still have loans outstanding. Many claim they face losing their homes, or even bankruptcy, as a result,” The Telegraph report said. “Your views on the ethics of tax avoidance aside, bankrupting people for schemes they declared to the taxman almost 20 years ago seems grossly unfair, particularly when they were following expert advice.”
It added: “The Government hasn’t so much moved the goalposts as pulled them from the stadium and set them alight. Most of those affected accept that they must pay what’s due, but some face six-figure bills and HMRC has agreed to five-year payment plans only.”