Who can ask to see my tax return? (tax return and privacy)

porgiegeorgie

Hello all,

I have tried Googling an answer and can't find any information so am hoping somebody here might know something.

I am self-employed and registered as a sole trader. Most of my income comes from working with children with autism on home education programmes. Two children I work with get funding from the local authority as part of their EHC (education, health and care) plans, both plans are quite new. As part of the plan the parents hold an education budget provided by the local education authority, I invoice the parents for work I do with their children and they pay me from the budget.

Now here's where I need some advice and information:

The local authority has just asked parents to check that the people working with their children are registered as self-employed and paying appropriate taxes, this includes checking my UTR number and NI number and checking I have a DBS and public liability insurance. This is all fine and I am happy to provide all these things to them.

However, the local authority is also saying that the parents must take a copy of my most recent tax return and make a copy of my yearly tax returns from now on detailing tax paid for work done for them.

I have other income from working with another child whose family pay from their own money and from work as a search engine evaluator. As a sole trader I declare my whole income in one tax return (I checked that I could do this when I first started out and it is allowed) so my tax return includes my whole income, not just the income I get from the two EHC budgets. The tax return doesn't allow you to input each client income has come from, just the whole amount so without checking my accounts all they'll be able to see is that I've paid tax on an amount more than I've earned from just the two budgets.
I thought one thing I could do is provide a copy of my SA302 tax calculation but with the figures redacted so it shows I have submitted a tax return and paid a bill but not what the amounts are.

My question is, does the local authority even have the authority to request this information? Who has the right to demand to see your tax return?

I really don't want the parents of the children I work with to be making copies of this personal document and to know exactly what I earn each year.

I have tried finding information on the internet but can't, if anyone can give any information or post any links to anywhere that gives guidance in this that I could send to the local authority, please do. I figure if I can't get anything here I will probably phone HMRC and ask them for advice.

MacMickster

Whilst they don't have the right to see your tax return - that is, you can't be forced to show this to anyone, if this is now the policy of your local authority then don't expect to get any clients who are funded by the local authority if you exercise your right to keep your tax return private.

It is entirely your choice.

sangie595

Anyone can ask to see it. It's a request, not a demand. Just like you can request that they allow you to be paid out of public funds, but that doesn't mean you are going to be!

TBagpuss

They cannot force you to disclose it.

It does seem a bit excessive - you could contact the council directly to raise your concerns.

Would you be more comfortable to provide the evidence to them directly, rather than to your clients? It would limit the disclose to one organisation, which should have better data protection policies and processes than a random person / people.

You could also contact your local councillor to ask about this policy.

Ideally of course you would get a letter from HMRC to state that you have declared your income from council-funded work and have paid the tax due but I suspect that getting blood out of a stone would be easier...!

porgiegeorgie

TBagpuss wrote: »

Would you be more comfortable to provide the evidence to them directly, rather than to your clients? It would limit the disclose to one organisation, which should have better data protection policies and processes than a random person / people.

Yes, this is my main concern. It is definitely something I am going to have to discuss with somebody. Tax returns include ALL income, as well as earned income it shows the tax I've paid on interest earned from my savings, this is information that could be used to literally map out my entire financial status. Hence why I'm not comfortable with just anyone seeing it.

sangie595 wrote: »

Anyone can ask to see it. It's a request, not a demand.

The parents have been told there will be spot checks and they must produce this information (including copies of tax returns), and that they are liable for unpaid taxes if we don't pay them, which is stressing them out and does make it seem like more of a demand than a request.

MacMickster wrote: »

if this is now the policy of your local authority then don't expect to get any clients who are funded by the local authority if you exercise your right to keep your tax return private.

It is entirely your choice.

I have read through the policy document relating to EHCP and personal budgets on the council's website and it makes no mention of matters relating to taxes or employing the services of a self-employed individual as part of the child's provision. These EHCPs are very new, so it is possible there are no firm guidelines in place yet.

My main concern is how my personal data is being handled and who is seeing it. Of course the council has a duty to account for public money, but it has felt quite heavy-handed how they've gone about doing it. It feels like the responsibility should fall on me. If I don't pay my taxes I should be the one who has to pay it and who gets fined, not the parents. If the council wants to know what's happening to their money they should be the ones to check, not the parents. As I said before, I'm happy to provide evidence of my self-employed status to the parents and if the council want to check with HMRC they can.

Will definitely have to try and find somebody at the council to talk to.

sangie595

I think that you fail to understand that the Council CANNOT check with HMRC. And the Council are, in fact, absolutely right. There have been a number of instances whereby parents and carers have become liable for unpaid tax when an employee who is self-employed (or even, possibly not self-employed!) hasn't paid. The Council has a legal duty to fully inform parents of their legal obligations as employers - I agree that if you don't pay it should be you who is fined, but it isn't! And given that fact the Council are exercising their duty of care to the parents in making sure that they cannot be; and in making adequate checks to make sure they cannot be. Most of these parents aren't used to employing people, don't know the law, and have been landed in this situation through no fault of their own (or the Council's). These budgets are a revolution in some ways, but they come with a price - the Council no longer commissions all services and people who don't know what they are doing, and are therefore open to manipulation, are ending up in trouble because of their lack of knowledge and ability.

Your self-employed status does not prove that the income has been declared - I could set up self-employed status and never declare a penny. Or only declare half of my income. There appears to be a whole load of "self-employed" people whose only income appears to be tax credits!

unforeseen

The bit that I don't understand is that unless the parents are tax experts and fully understand the OPs business accounts, have access to all invoices etc how can they be sure just by seeing a tax return that the OP is paying tax on THEIR payments?

sangie595

unforeseen wrote: »

The bit that I don't understand is that unless the parents are tax experts and fully understand the OPs business accounts, have access to all invoices etc how can they be sure just by seeing a tax return that the OP is paying tax on THEIR payments?

They can't. But the requirement is to take reasonable steps, and if they can show that, they will not be liable

bingo_bango

Is there not a compromise whereby you provide a redacted version to the parents? The LA will have no interest in anything not related to their grant, they just want to confirm that required taxes are being paid correctly on that element of your income.

If they subsequently asked for a non redacted version then I suspect that a request from you for guidance from the ICO would soon slow them down.

unforeseen

sangie595 wrote: »

They can't. But the requirement is to take reasonable steps, and if they can show that, they will not be liable

But all that can be shown is tax is paid. Not on their payment or whether the right amount is being paid on the income declared

I don't think a tax return has enough granularity to show any information that would be useful to the parents in ensuring that tax was paid, even incorrectly, on their payments or even to make a reasonable assumption that it has been paid

sangie595

unforeseen wrote: »

But all that can be shown is tax is paid. Not on their payment or whether the right amount is being paid on the income declared

I don't think a tax return has enough granularity to show any information that would be useful to the parents in ensuring that tax was paid, even incorrectly, on their payments or even to make a reasonable assumption that it has been paid

But a lot of councils are asking for exactly these documents and this is based on HMRC advice. So what you think isn't really the point. The point is that if the OP does not provide these documents then the parents will not be allowed to employ them.