Legality of Tax Liability in an Employee Relationship

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Dear HM Revenue and Customs,

HMRC generally take the view that "tax affairs are the responsibility of the tax payer". However, it is possible that an employer (either a traditional employer, or an umbrella company) could pay the worker the net of their gross income, but fail to make the tax payments to HMRC on their behalf. This is clearly fraud, performed by the employer, but the worker remains liable for the unpaid tax. The worker/employee legally has no control over the fraud - because they're not allowed to "handle the money" until it is paid to them with the tax removed.

Please provide details of any studies or research, either commissioned by, or performed by HMRC into the legality of such a situation. That is, that an individual can be responsible for tax to be paid, yet have no direct control over the payment of that tax because an employer is legally obligated to do so on their behalf.

Yours faithfully,

Ralph Bolton

FOI Team, HM Revenue and Customs

Our ref: FOI2021/15677

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