Where is that glimmer of hope for the Self-Employed?

macgirl

I was made redundant early in the tax year of 2018. I went self-employed, but despite submitting tax returns for 2018/19 and 2019/20, I've so far managed to get zilch from the government. The reason being that my redundancy pay (and small amount of income from a rental property - not enough to live on) was greater than my self-employed income during 2018/19.

Now things are very tough and to add insult to injury, I have to pay 18 months worth of tax this month. I received a rebate during my first year of business after being supertaxed (?) on my redundancy pay. Now I have to pay 2019/20 and 6 months upfront, on account. The "help" from HMRC is to spread the cost, but with interest, if I'm right?
I see self-employed mates unaffected, but still managing to get £1000's in grants from the government. I have applied for a bounce-back loan, but it grieves me that I've paid so much tax over 25 years as an employee and since being made redundant, have not had JSA but carved out an income for myself and still am entitled to nothing. This feels really unfair and I know I'm not the only one who has fallen through the cracks. I also understand that HMRC are trying to deter fraudsters, but there must be a way for us to appeal? 

Applying via HMRC, I just get a flat "no", with no means of appeal.  Surely, there must be another way, other than getting into debt via a loan?
Does anyone know if there is an appeal line or some other avenue through which to appeal?
Many Thanks in advance

Jeremy535897

Your redundancy pay must have exceeded £30,000 to be taxable?

macgirl

Hi Jeremy
No it definitely was not!

unholyangel

Jeremy535897 said:

Your redundancy pay must have exceeded £30,000 to be taxable?

In my experience, most people don't understand the difference between redundancy package and redundancy pay. The former of which obviously includes pilon, holiday pay, salary etc while the latter is the "compensation" element of the package. 

Op if your self employed friends are unaffected but claiming grants, they're doing so fraudulently. There has always been a requirement that the business was adversely affected and they all needed to declare they meet the eligibility requirements in order to claim. 

If you think they've misapplied the law you can maybe appeal informally - although I believe this is outside of the tribunals remit. However it sounds as if they have correctly applied the law. In which case it would be an appeal to your mp to have the law changed. 

macgirl

You are quite right, it was the former, redundancy is not my area of expertise.
I have no interest in dobbing in others, just looking for parity. Thanks for taking time to reply.

unholyangel

macgirl said:

You are quite right, it was the former, redundancy is not my area of expertise.
I have no interest in dobbing in others, just looking for parity. Thanks for taking time to reply.

Very few people deal with it regularly (accountants, solicitors, employers) so not many have any expertise in redundancy, let alone how it's taxed. 

You say you've no interest in dobbing them in, and I understand the sentimentality of it. But did they use their ill-gotten gains to help out their loved ones in need (aka you) or have they shown as much care for you as they have the law? Fraud is a serious matter normally. But it's more abhorrent, even in law, when it's abusing aid made available in times of national crisis.

I didn't mention it before as assumed you would have checked already, but other than BBL, the only other thing I can think of is checking a benefits calculator. Maybe check your local authority and see if they have any grants (some are area/industry specific). 

macgirl

I don't think it was fraud, they clearly met the criteria but were not massively impacted. It was oft spoken in the media that some people would qualify for a grant and do quite well out of the pandemic. Swings and roundabouts.
Thanks for the tip regards LEA, I have seen that but I don't have premises, so not sure I qualify.
I'm optimistic that 2021 will be better, and everything will work out! Thanks again

Jeremy535897

Your reference to "supertaxed" made it sound like you got a lot, but I guess from your reply you mean that you got an extra sum (PILON, holiday etc) in one month so paid more tax than normal, and got a refund later?

The grant mechanism was crude, treating people who were employed then self employed in the same way as people who were employed and self employed at the same time. The first two grants required claimants to show only that they had been adversely affected, however trivially, in a certain period to claim (just buying a box of masks sufficed), and it is extremely unlikely that you would have a sufficiently detailed knowledge of others' financial affairs to know they were claiming fraudulently. It's amazing how many people like to boast that they cheated the system when they genuinely qualified (however undeservedly).

You are correct that if you cannot pay your tax on time on 31 January 2021, you can defer it, with interest, currently at 2.6%. See https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19

You should not simply let the date slip by without paying.

macgirl

Thanks Jeremy. Yes, you are correct re: my pilon etc that's why I added the question mark regards "supertax" :-)
To be fair to my friends, they didn't boast of cheating the system, their accountant handled it and applied on their behalf, saying they were eligible. I bare them no malice, as I said, its the swings and roundabouts of life!
It is a crude system, but understandably difficult to get it right for everyone. Thanks again

Jeremy535897

macgirl said:

Thanks Jeremy. Yes, you are correct re: my pilon etc that's why I added the question mark regards "supertax" :-)
To be fair to my friends, they didn't boast of cheating the system, their accountant handled it and applied on their behalf, saying they were eligible. I bare them no malice, as I said, its the swings and roundabouts of life!
It is a crude system, but understandably difficult to get it right for everyone. Thanks again

Their accountant might have advised them they were eligible, based on what they told the accountant, but could not have applied on their behalf. Taxpayers had to apply themselves.

macgirl

Again, you are probably right, tax affairs are the total opposite of my forte!!