New business, problem with 1st customer!

Red_Gaz_2

Hello people, not sure if this is the correct category to post in but here goes..

I recently registered as self employed in January as I have decided to produce extra income in my spare time.

I received my 1st order in January from somebody that I have known for years and invoiced him shortly afterwards, payment terms being payment due on receipt of the invoice. I have not received payment, so sent him a reminder over the weekend by post to which he has replied by email this morning. I appreciate I may have left it a long time to chase up payment but as I said, I've known him a long time.

He states that as I am non VAT registered or a Limited company then he cannot pay me without my 10 digit UTR code from HMRC. My paper work from the Tax Office is at home (i'm at my proper job at the moment!) so cannot get the number so have rang the Tax Office and they say he shouldn't need this number to pay me, and in any case as I have only recently registered with HMRC, I may not yet have one.

Anyone know if this is the case?

I think he's just trying to stall me and assumes that I haven't registered self employed so has a reason not to pay me at all!

Who needs friends...

Cheers.

paulwf

I can't think of any reason why they would need your UTR. There might be a few exceptional cases but I've never heard of a UTR being requested. He wouldn't be able to verify it anyway

By leaving it 2 months he obviously moved you to the bottom of the payment pile and is now in no hurry to move you back to the top of the pile.

Red_Gaz_2

Thanks for your reply Paul, just wanted it confirming before I take further action.

Red_Gaz_2

OK, I have replied stating that he does not need this number to pay me and he has replied that as his company is Ltd, he needs to see proof of my self-employment for tax reasons!

Any ideas what he is on about??!

JasonLVC

The Unique Taxpayer's Reference is the 10 digit number issued by HMRC when you register for self-assessment.

What are your selling to this customer?. Is it construction type services by any chance?, if so, then you'll likely be a sub-contractor under CIS rules and on these occasions, the customer does have to verify that the sub-contractor they are using are 'legit'.

http://www.hmrc.gov.uk/cis/advice-con-pay.htm

If you're just selling him some widgets or trading goods via ebay, then I cannot see why the customer needs your UTR other than they want to be sure you are paying tax on the income you receive from them.

Sounds more like they are stalling to pay, so seek advice on how to pursue outstanding debts.

fengirl_2

Your UTR is private to you and on no account do you tell it to anyone else.
In any case a UTR does not prove you a re self employed becasue lots of other poeple other than the s/e come under self assessment.
As its the 'employer's' duty to satisfy themselves that the work they are offering is true self employment, then they need to contact their tax office giving them details of the arrangements and ask for their advice.
Give him this information and say that if you are not paid within 14 days, you will take him to the small claims court.

kalaika

fengirl wrote: »

...its the 'employer's' duty to satisfy themselves that the work they are offering is true self employment...

I would guess that it is this that the customer is trying to protect himself against, although I would have thought that the customer would have asked about this straight away when the OP supplied the invoice if this was true. By delaying it until now it appears more like he is just trying to give himself a bit more time to pay!

As Fengirl says, there is no need for him to insist on being given the UTR. He should be contacting HMRC if he is unsure as to the OP's employment status.

PlutoinCapricorn

The same thing happened to me some years ago: the organisation just wanted evidence that I was self employed. In theory, if I did not declare my income and pay tax, they might be liable. It was the Finance Director, a qualified accountant, who requested my UTR and I gave it as I did not know any better. None of my other clients has ever asked for evidence that I really am self employed.

fengirl_2

Its not true to say that if a self employed person does not pay tax on their income the customer pays the tax. Life would be chaos if everytime your plumber didnt declare his fee from you that you paid the tax instead!
A UTR is no proof of self employment as I said above. The onus is on the 'employer' to satisfy himslef that his contract with the 'worker' is not PAYE - this in no way relies on the worker being already registered as self employed, but on the relationship between the parties.

Red_Gaz_2

Just checked all the correspondence I've had from HMRC and nowhere does it give a 10 figure reference, which backs up what the nice lady at the tax office said earlier - beacause I have only recently registered as self employed I may not yet have a UTR.

I can't let him know the number if I don't have one!

Just to confirm, I have supplied him with material items, not labour.

I'm trying to sort this without it affecting my 9-5 job as I don't want to upset my boss but it's difficult as my customer rents part of the unit we work in from my boss!

If I call his bluff and demand payment within say 14 days, is it better to do this by letter (maybe even recorded delivery) or will an email suffice?

Thanks again.

Horace

Send the letter by recorded delivery and give him 14 days from the date of the letter - point out in the letter that failure to pay will mean you take steps to claim the money plus any interest outstanding from the small claims court (you can actually make the claim online at moneyclaimsonline.gov.uk) - I think that's the correct address although cannot remember precisely.

Is your self-employed business cover the same sphere as the one in which you are currently employed? Just wondering in case there is a conflict of interest.

This customer is being ridiculous and does not need your UTR as fengirl has said that is between you and the taxman or between you, your accountant and the taxman. He knew you were self employed when he ordered the goods from you.