Orchestras in the UK face closure and a decline in international stature if forced to pay a £33m National Insurance bill, according to an industry body.
The Association of British Orchestras represents 55 bodies
The Association of British Orchestras (ABO) believes it was not properly advised by Her Majesty's Revenue and Customs (HMRC) on payment changes.
It suggests backdated and future insurance payments for freelance musicians would cripple the industry.
HMRC said it did not believe any orchestra would have to close.
The concerns were first raised in a leaked e-mail from ABO director Russell Jones, citing fears that four out of five orchestras could face closure.
'Un-joined up thinking'
Since a change in working laws in 1998, freelance singers and musicians have been classed as employees for NI purposes, but self-employed for tax purposes.
But investigations by HMRC found that orchestras had not been paying enough NI and said the money would have to be paid back.
The ABO says while HMRC is trying to claw back £33m, the Department for Culture, Media and Sport had invested £35m in the sector.
The ABO says it is "extremely concerned at the un-joined up thinking" between the two government departments.
"There is a real danger that if this matter is not resolved one of the leading orchestral sectors in the world will be severely affected with likely closures and would cease to be of international quality and significance," the ABO said in a statement.
ABO chairman Michael Henson - who is also managing director of the Bournemouth Symphony Orchestra - said every orchestra could be at risk.
"I think this is an industry-wide issue, the issue affects every major orchestra and smaller orchestra in this country and would have huge effects upon how they operate," he told BBC Radio 4's Today programme.
Musicians' Union general secretary John Smith called the situation "most regrettable".
"The patient has been unwell for sometime, this news could be the final straw for some orchestras," he said.
HRMC said it was in discussions with orchestras and it did "not believe any orchestra will need to close".
The DCMS said it was in discussions with all parties seeking "a way forward".
A spokesman said: "We appreciate that the situation is very serious and clearly it needs to be resolved quickly and fairly between both sides and that's what we are trying to establish at the moment."