Employment status & MLR

Employment status & MLR

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I have a client who is self-employed. One of her clients has grown over the years and now represents about 50% of her income. A few times I have advised my client of the potential issues surrounding her employment status. I have advised her to take this up with her client to ensure that they have taken appropriate advice. My client tells me that they feel they are acting correctly.

At what point (a) - (d) would I have a reportable suspicion?

(a) If I just think they have taken advice that may disagree with my thoughts?
(b) If I think they may not have not taken advice but they think they are correct anyway ?
(c) If I just know they are wrong regardless of what advice they have taken or not?
(d) If I think they have knowingly chosen self-employment because it's cheaper?
Steven Holloway

Replies (7)

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By AnonymousUser
20th Nov 2008 14:01

Perfect ...
Thanks David.

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David Winch
By David Winch
20th Nov 2008 10:02

It's the same

Steven

I would say exactly the same as I said before.

There can be no evasion without dishonesty.

Do you have reasonable grounds to suspect your client's client (employer?) of dishonesty - or do you simply think that they have come to a different conclusion from you in a grey area regarding employment status?

If the client's client is doing something which (you suspect) he realises is wrong, and it actually is wrong, but he is doing it anyway - then you have a reporting issue (if a benefit is being derived from the wrong-doing). OK?

David

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By AnonymousUser
20th Nov 2008 09:30

Sorry, I obviously wasn't very clear!
I have no concerns about my client. She accepted work in good faith and has responded correctly to my questions (by referring them to her client).

My question is aimed at whether I have an obligation to report HER client if I suspect they are incorrectly applying employment status to gain a tax advantage. I am not saying they are ... I just need to know where my trigger point is reference the (a) - (d) sliding scale in my original post.

Hope that's clearer ... and thanks so far.

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By skylarking
19th Nov 2008 14:36

Isn't it a matter for . .
Your client's client's accountant? Particularly as it is a subjective area which is often various shades of grey. Ask 3 accountants and you will get three different answers. I'm no expert like David, but from a common accountant's view, It doesn't sound like ML to me.

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Euan's picture
By Euan MacLennan
19th Nov 2008 14:13

Yes, but
Never mind the client. What about the client's client? If the client's client is incorrectly treating the client as self-employed when she should be employed, the client's client is evading tax or more to the point, NIC. As this information has come to your attention in the course of business, should you not be reporting the client's client?

I assume that you have something more to cause suspicion than the fact that your client derives 50% of her income from the one source. You do know the actual circumstances of the job, don't you?

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David Winch
By David Winch
19th Nov 2008 12:06

How about . . .

Steven

How about "none of the above".

Your client cannot be engaged in tax evasion (which is the particular crime you have in mind here) unless they are behavingly dishonestly.

In legal terms a person is dishonest where BOTH (i) they are behaving in a way which ordinary and decent people would regard as dishonest, and (ii) the suspected person himself realises that he is behaving in such a way.

A dishonest 'act' can include a dishonest omission or inaction.

So if your client genuinely believes they are acting properly and honestly they cannot be engaged in tax evasion.

(Of course HMR&C may consider them to be negligent and require them to pay tax, interest and penalties as a result - but mere negligence is not reportable under MLR.)

David

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By User deleted
19th Nov 2008 11:06

can't see it
Hi Steven

Unless there is more to this than meets the eye, I can't see it as an MLR issue. I might be wrong so experts please comment.

But you say that your client has been self employed (for some time i guess). Your client's client (!) has grown; so it started out as a small client and has got bigger. No problem. It's 50% of income. No Problem in itself.

It is not wrong to be self-employed to gain a tax advantage (unless it falls foul of the employment status of course).

You have advised what you think. The client has looked into it and feel they are ok. Have you put your recommendations in writing?

Are you sure you are correct? I am not saying you are not - I don't have all the facts.

If you are sure you are correct, have advised the client your recommendations, and they ignore it I suppose you can sack them as a client.

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