Tax problem - working as freelancer, but treated as employee

johnllew

Lifeisbutadream wrote: »

Because I know them all personally.

That's no reassurance. Unless you have access to their tax affairs you can't know for sure, can you? That's the advantage (for the Revenue) of PAYE; there are very few ways round it.

Lifeisbutadream

johnllew wrote: »

That's no reassurance. Unless you have access to their tax affairs you can't know for sure, can you? That's the advantage (for the Revenue) of PAYE; there are very few ways round it.

I only ever pay invoices with cheque of bank transfer, never cash, so the subbies would have to be very stupid to not pay tax and risk an investigation.

I am doing what I am supposed to do from now on (although not PAYE as we do not have employees). Although I still feel as though I am an unpaid tax collector.

Everyone loses really (except the tax office) Our prices will go up (that is everyday people getting kitchens fitted etc.) our subbies will get paid less (because my work load will go up, so we wont be able to profit on the amounts we have previously agreed to and our profits will be down.

TBH if someone was not going to pay tax they wouldnt do it anyway. I know plenty of people who work for cash and cash only, never pay tax and never declare any of their earnings. These systems that are in place target businesses such as mine who are trying their best to do what is right and make an honest living. Its easy to get money from the ones who play the game. They maybe ought to put a bit more effort into the ones underground, then we all might pay less tax.

Lifeisbutadream

jimmo wrote: »

Lifeisbutadream
No answers, I am afraid, but I really think you need to step back a little and think about your situation, especially your relationship with the sub-contractor you referred to in your last post.
As a former taxman I think that the law is quite clear but I really do appreciate that those on your side of the fence find it difficult to get to grips with it.
1) Is the person you refer to as your sub-contractor actually a sub-contractor or employee? That, in itself is a huge question which I used to deal with by seeking to interview both parties.
On the basis of your posts I would probably accept that he was a genuine sub-contractor but I only have your side of the story, not his.
2) Is your sub-contractor “certified”? Sorry that’s my word rather than official jargon but I hope you get the drift. In my day those with a clean bill of (tax) health could be “certified” and receive their sub-contract payments in full because the taxman was confident that the individual would meet his tax obligations.
If he is not “certified” you, as the contractor, were obliged to deduct tax under the CIS scheme. If you failed to do so I am afraid you could really be in trouble.
Given your last post that he likes to spend and worry about his taxes later do you really think that he has paid his taxes up to date. I am afraid that he has the ideal recipe to get away with it. You were almost certainly responsible for deducting tax under the CIS scheme and if the taxman comes knocking at his door his first line of defence will be that he assumed that you were deducting CIS tax.
For goodness sake don’t trust him. No matter how good his work is you could be in real trouble.
I really think you need professional help now.

Yes, he has paid his tax up to date. Yes he is verified. He may not be very good with money but he is honest. Even when he went backrupt, he paid off every single debt he could before he did so, when he didnt have to. I do know him, he is a friend as well as someoene who works with us.

We are a relitively new business. When you set up a business your aim is to work hard and make the best of it. Because I was employed at the same time for a long while and I also have 2 young children, I did not have time to go on courses or take in the understanding of the CIS system.

As soon as I found out what I should do I sorted it out. I will now pay tax for the subbies. I do not feel bad about not doing it before because I know that all tax has been paid. I certainly dare not tell HMRC.

As I said in another post, nothing I have done was deliberate, no taxes have not been paid and if the taxman decided that he would try to get me done for 'tax evasion' then I would go to prison to make a point. There is no way that I would pay something that we have not got, money that we have never made.

If we had decided that we would never pay tax, we could have simply just taken cash for every job we did, we could have never paid VAT, never paid income tax, paid our subbies cash and paid ourselves in cash. We could have been driving round in a flash new car and I would have the new bathroom I desperately want.

Because we are honest, we are east targets for the taxman. Whats the point of chasing the ones underground, when there are the stupid ones on e surface? easy pickings (I know a builder - not someone we use - who has never paid a penny of tax in his life. He drives a merc and lives in a house with a swimming pool)

I ask any taxman to investigate me. There is nothing in any of my accounts (except the non payment of contractors tax).

I wish our government would wake up and smell the coffee. The decent hardworking people of this country will one day get up and walk away. All they will be left with is the 'i have rights' society and the greedy criminals.

RayWolfe

Too much emotion!
Stop posting the same comments over and over here and use the time to get some knowledge and you may prosper.
Good luck to you, I hope you do well.
Oh, and keep reading the Daily Mail, I'm sure it helps to keep your blood pressure under control.

Lifeisbutadream

RayWolfe wrote: »

Too much emotion!
Stop posting the same comments over and over here and use the time to get some knowledge and you may prosper.
Good luck to you, I hope you do well.
Oh, and keep reading the Daily Mail, I'm sure it helps to keep your blood pressure under control.

Grow up. there is absolutely no need to get personal

I was answering questions asked to me.

I will prosper thank you, because I am good at what I do. I dont read the Daily Mail, but I can see why someone like you would think that I do. :rolleyes:

monkey_writer

Thank you so much for all your comments and advice everyone.

I'm sorry that I upset you, 'Lifeisbutadream', but I should point out that my employers' situation is quite different from yours - they are doing it willfully and are extremely high net worth individuals. Like most of such people, they don't believe in paying tax if they can get away with it. A former employee threatened to shop them and they just shrugged and said they'd just pay the fine - it would be less than what they've saved over the years.

I guess I'll go and speak to my tax office and see what they say about it.

Moneymaker

Lifeisbutadream wrote: »

I have an invoice in front of me from an electrician for £370 for less than a days work (I am making £30 profit on that

If that's typical, this doesn't seem to be a viable business model.

Lifeisbutadream

Moneymaker wrote: »

If that's typical, this doesn't seem to be a viable business model.

It is quite viable thanks. We are trying to build up a business, it doesnt happen overnight. We are a small family business, hoping to expand by getting together a customer database of satisfied customers who then pass on our details to others. It ibviously working because we are booked up until the end of the year.

We will put our prices up gradually and hopefully in a few years time can step back from the business and start to make a larger profit.

I was trying to make the point that we are not 'employing' people - they are the ones making the money (on their part of the job) not us. In one post my business was compared to chimney sweeps making money from children.