More than a third of contractors have received an HMRC fine or penalty according to research by payroll umbrella company Paraplus, which calculates that some 600,000 freelancers have fallen foul of official regulations in some way.

Its survey of 2000 freelancers found that more than half (55%) say they struggle to understand HMRC guidelines, and 42% report that their biggest concern about working for themselves is understanding and adhering to HMRC guidelines. Nearly two thirds (64%) say they have worries about the paperwork and administration involved, while 54% said they either did not know or were unsure of what they could claim as an expense.

HMRC has introduced new regulations regarding 'office holders' which came into effect from 6 April 2013 and are designed to extend the IR35 rules which already applied to NICs to cover tax legislation as well. There has been considerable doubt over the definition of an 'office holder' and how that job description relates to the role of a freelancer.

Phil McDonald, managing director of Paraplus, said: 'These findings aren't surprising as the regulations and constant updates from HMRC can be confusing, especially if you're not an expert. Furthermore, HMRC doesn't consider ignorance to be an excuse, so those workers who have already been fined or might be, are at risk. Being on the right side of HMRC needs to be at the top of every contractor's priority list.'