Employment income not taxed at source

Employment income not taxed at source

Didn't find your answer?

I have a client who has been employed by a company for say 1 year. He has received income, he believes net of PAYE & NI.

Now he has left, his employer is stating that the amounts received were in fact gross and paiud to him on a self employed basis.

My client does not have any contract but does have a paper trail of discussions stating that he was employed and that his pay was net of tax/NI, although no payslips were ever issued. He never provided any invoices etc. He was treated as an employee - i.e. paid holiday, set hours, mutuality etc.

My question is, how do I treat the income on his tax return - I assume I try and calculate the gross based on what he received and declare this as employment income? I have no Emplyers reference code etc, although I do have the employers name/address etc.

Any thoughts?

Many thanks

Chris

Replies (4)

Please login or register to join the discussion.

avatar
By mikewhit
07th Sep 2010 18:16

Paper trail

Did he have a P45 or P60 when he left ?

A contract of employment ? A written job offer ? Anything ?!

I wouldn't turn up somewhere day after day without something in writing.

Thanks (0)
Should Be Working ... not playing with the car
By should_be_working
08th Sep 2010 09:47

Employers Responsibility

Presumably, then, if HMRC were to do a compliance visit they would hit the employer for the "unpaid" tax/NI.

Not sure how this helps you though! Gross up the figure and write an essay in the whitespace?

Thanks (0)
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
08th Sep 2010 10:07

PAYE

It's the employers responsibility to deduct tax and NI, and this employee has a paper trail stating that he was an employee and that he was paid net of tax and NI.

Therefore I would gross up his net pay, put those entries on the employment pages along with the employers name and address, and make a note in the white space as to what happened.

Grossing up isn't strictly correct I wouldn't think, because we all know the tax and NI was never deducted (but definitely should have been), but the alternative is to enter the net pay and leave the tax box blank, which would give rise to a liability, definitely not what we want.

Thanks (0)
avatar
By valentino rossi
08th Sep 2010 13:26

Don't judge fudge the numbers

I think your client needs take this further with the employer before you make any sort of disclosure.

The reason I say this is because your client should have been suffering Class 1 NIc whihc will go towards his entitlement to state pension.

Once this avenue has been exhausted I would look at how you should proceed as it will either be employment or self-employment at this stage.

If you were going to treat as an employment you would need a PAYE ref.

If your client agreed an wahe was this gross or net. Should the employer now claim it was as self-employment income they are laible to repay the witheld funds (the PAYE they calculated as due)

Final question did your client give the employer a P45 when they started?

As you have until January I dig a bit deeper before you start fudging the return.

Thanks (0)