Massive tax problem

PlutoinCapricorn

The forum is not itself today and many people may have decided to give it a rest.

Now you know that you should really be considered an employee, how about starting a new post in the Small Biz and Charities section, listing your situation and the problems it may cause. That may attract the attention of some really good people.

thrifter

Thanks for all the information. I'm still amazed at the speed of it. I was convinced it would go unanswered. At last I have some practical advice and some tasks to be getting on with. First things first, I will start a new post in the Small Biz section, call C.A.B when I have a moment tomorrow and then try to get a photocopy of said records.

Thanks again everyone

PlutoinCapricorn

A major spamming attack lasting many hours and posts being converted to !!!!! means that many regulars may be offline.

I don't think that the CAB would report you for anything. Please do not do anything drastic until you know what is what.

I am afraid that you are right about the job though: they know that work is difficult to get so might be able to replace you with someone else who does not know about these issues.

PlutoinCapricorn

Hello Thrifter. Have there been any new developments in your case?

This issue of employment versus self employment comes up from time to time, and it is useful to remind organisations that employ people of the rules. People who are told that they must be self employed also need to be aware of HMRC's guidelines.

Savvy_Sue

The original thread is here, but I shall ask for a move and merge.

thrifter wrote: »

• 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.

Just for clarity, the £10,000 limit is the current normal tax-free allowance. If your income from all taxable sources in the tax year 2014-15 is less than this, you're unlikely to have to pay any income tax, unless you owe tax from previous years.

HOWEVER, if you are self-employed, and your profit from that self-employment is more than c. £6000, then you do have to pay NI contributions, so registering with HMRC is needed. Also, in some situations, it's a good idea to pay voluntary NICs even if you don't have to.

thrifter wrote: »

• I now potential face late charges from HMRC. If an organisation is not operating a PAYE system contracts should clearly state not only how tax will be deducted or if the onus is on your employees to declare their status to HMRC e.g self employed worker. This will protect your organisation from unknowingly getting into trouble and stop your workers being landed with a hefty fee.

I am not so sure that you will be liable for a late registration fee. If you were genuinely self-employed then yes, you're responsible for registering. If you were falsely self-employed, then generally it's the employer who is liable to sort the mess out, pay the tax and NI that should have been paid, etc.

thrifter wrote: »

• Furthermore it appears that I have been falsely self employed. Upon receiving the job, I never received a contract. In hindsight, this should have set off alarm bells but due to the state of the job market and other circumstances I just went along with things. False self-employment involve an organisation offering the services/time of a self-employed worker to a client and then using their employee's self-employed status to avoid paying tax. This setup can also allow organisations to avoid paying sick pay, holiday pay and overtime. This state of affairs has caused me a lot of stress to say the least. HMRC obviously frown on cases of false employment and trying to introduce new legislation to clamp down on it.

All of the above is true, but I do not think you are the one in the wrong here, so I'd worry less and job hunt more, because you are not going to be the most popular person around when HMRC start investigating.

supermonkey

thrifter wrote: »

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.

thrifter wrote: »

I believed that tax had been deducted and to reported to HMRC

First paragraph you indicate you felt you were self employed but did not need to register due to the level of earnings. Second paragraph you indicate you felt you were employed.

In any case, level of income is irrelevant - you would register regardless of whether you think you'll be under the tax or ni threshold. You'd then complete self assesment & if under the threshold there'd be nothing to pay.

thrifter wrote: »

. “You better be keeping records, it’s a tax year”

I'm baffled - every year is a tax year.

thrifter wrote: »

I have this horrible feeling that the onus was on me to inform HMRC.

If you are self employed, then yes, you would need to inform HMRC.

However it is not clear whether you are. The "employer" may say you are, but I wonder if HMRC would say different, in which case you have made no error.

Personally, I'd contact HMRC explain the situation & see what they say. They may well waive any fine & if not, the fine is likely to be small.

Pennywise

I think the trouble starts with poor terminology. HMRC regard "self employed" as being a business. Many workers think they are self employed because they have several jobs (i.e. a cleaner who works for several different people/firms) - just having lots of jobs doesn't make you a business - it may mean that you're a person with several employments. Businesses and charities/clubs (especially charities/clubs who seem to think they deserve special rules) feel free to ignore employment rules because they don't want the extra cost and hassle so wrongly classify some of their workers as self employed - but they're not because they're not "in business". Luckily, the buck stops with the employer if HMRC come calling and decide that the person was truly an employee, so the worker isn't really at risk - it's the employer who gets the bill from HMRC for the tax/NIC that should have been paid.