Massive tax problem

thrifter

Dear MSE users,
Due to a family member facing their own tax rebate problems over recent weeks, I have examined my own affairs and urgently need tax advice on an ongoing situation.

I wrongly assumed that as I was earning under the £10,000 National Insurance threshold and not claiming benefits I would not need to register with HMRC as self-employed.

Initially I was earning around £70 a week (January 2013) and this has recently risen to around £135 with an increase in working hours ( currently working around 16 hours per week but this varies). I do not receive sick pay or holiday pay on top of this but I cannot prove this as I never received an official contract with a specific job description or pay arrangement.

The organisation I work for is a local charity and as I was being paid via official cheque, I believed that tax had been deducted and to reported to HMRC. Most of my weekly pay is now unfortunately being paid cash in hand, this along with an off-hand comment “You better be keeping records, it’s a tax year” has set off alarm bells. The organisation mentioned do keep thorough records and do employ a Treasurer so perhaps everything is legitimate. Despite this, I have this horrible feeling that the onus was on me to inform HMRC.

I am aware that ignorance is no excuse under the law and I am quite concerned of being served a large tax rebate and/or facing court proceedings and possibly even face jail time. I am frightened to receive help from my local C.A.B or TaxAdvice as I was informed they are obliged to report fraudulent activities to HMRC whether accidental or not.

I really want everything to be above board not just to ensure my future employability but to clear my conscience and give back. This is my first job since leaving college and I held onto this job out of desperation as I followed the mantra that any work is valuable. I would be incredibly grateful for any advice to help get myself out of this mess.


Thank you again


Yours sincerely
Thrifter

rogerblack

First question is - are you in fact employed?
Are you under any obligation to turn up?
Can you send in someone else to do your duties?

PlutoinCapricorn

First do believe that there is no danger of going to prison! This just might happen if there were huge amounts of unpaid tax, there was deliberate fraud involved and you had been collecting large amounts of VAT and not passing it on.

If you have not been earning enough to pay tax, there may be a late penalty or two for not registering as a sole trader before now.

One aspect though is whether or not the organisation that is paying you should really be treating you as an employee: HMRC do not like what they call false self employment. This is where you work regularly for the same organisation under their rules, but are paid gross and do not get paid holidays, sickness pay etc.

xylophone

Employed or self employed?
http://www.hmrc.gov.uk/employment-status/

PlutoinCapricorn

Small charities (and businesses) often don't know or don't care what their responsibilities are.

It is not advisable to have informal, unwritten arrangements. You really should have something in writing about the terms under which you work for them. Do you invoice them?

It sounds to me that you may be an employee in all but name.

There is also the question of National Insurance contributions and what they entitle you too.

thrifter

Thanks for such a speedy response. I would say that I am employed. The organisation in question pays me a wage, I did have a semi-formal interview to get said job, I had to go through CRB screening, I have to call in when sick etc. However on occasion, I have been asked to pretend that I am a volunteer which I am uncomfortable with. Would a volunteer would still be seen by HMRC as part of that organisation's workforce?

I am under an obgliation to turn up due to the nature of the work. The large majority of my work involves running homework clubs with local children (I also carry out admin work - updating the website). There is only myself and two other people carrying out a similar role. They cannot cover for me due to both of them studying at universities while carrying out this job.

Thanks again

PlutoinCapricorn

I would explain to them that they are taking a big risk by not having you on the payroll as an employee, with all the associated benefits. HMRC will hold them liable for employer's NI for example if they find out.

Unfortunately, they may decide that they would rather find another 'self employed' person to take your place.

thrifter

Pluto Capricon,
I have been told that I may invoice the organisation in the past for equipment (printing ink, papers, pens etc) but there is no offical procedure for this and when it has been pursued, it gets forgotten and I end up just biting my tongue. If I have been falsely self employed, what do you recommend I do?

PlutoinCapricorn

Paying you cash in hand sounds a bit dodgy too. Why would they ask you to pretend to be a volunteer? I don't like the sound of this very much.

Have you got a record of all the money you have earned during your association with this charity?

In your position, I would start looking at charity jobs...

thrifter

I haven't got a week by week breakdown of the full period as I was stupid enough to believe they were dealing with this but I have bank statements that list when I have put the money into my account.I doubt this is sufficent enought proof for HMRC. As I mentioned earlier, I have seen them filling out an outgoing records book which I can ask to photocopy for my own personal records.

Since waking up to how dodgy this organisation is, I have been doing a week by week break down of this cash in hand pay since August to date which has been saved onto a spreadsheet.

asajj

This sounds to me charity was not doing what they are supposed to do.
If you are employed, then surely they should be deducting and paying your tax cheque in. However this doesn't mean HMRC won't chase you if it isn't paid.

You are supposed to receive a payslip.

Try this - call them. Don't delay it.

cant post links but try citizen advice bureau tax help on google and use the link come up to call someone