U.K. should address workers forming companies to cut tax bill: Hammond

Genuine companies and 'hollow structure' need differentiation

LONDON (Reuters) — Britain should address the way some workers use companies to lessen their tax bill, finance minister Philip Hammond said on Monday, adding that any changes were an issue for the long term.

"I think there is an argument for looking at the way in which the same work being carried out by different people will incur different levels of tax depending on the structures they have put in place," Hammond told lawmakers.

Hammond suggested the tax system should differentiate between those who create companies to take genuine risk and invest capital, and those who use companies as a "hollow structure" to pay themselves through dividends in order to pay a lower rate of tax to income tax.

"We need to look at that and make sure that we've got a system going forward ... that can cope with these different structures in a way that's fair to everybody," Hammond said.

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