HMRC suspects big firms are underpaying £1.4bn in employment taxes HMRC believes large businesses could be underpaying £1.4bn in tax by classifying workers as self-employed when they should be classed as employees for tax purposes, according to law firm Pinsent Masons. The report suggests firms may be classifying staff as self-employed to avoid making Employers’ National Insurance contributions. The tax office has been clamping down on the so-called ‘hidden employees’ loophole, with Pinsent Masons partner Steven Porter saying off-payroll workers “are one of HMRC’s biggest priorities at the moment.” He added that even businesses that have sought to comply with the IR35 rules for off-payroll workers “are finding themselves in the crosshairs.” Tax regulation for off-payroll workers changed in April 2021, with the new rules imposing tax and compliance risks on large and medium sized businesses when engaging individuals through a personal service company. Previously, the contractor was responsible for applying IR35 and paying all employment taxes that were due.