How to prove to HMRC you was not self employed?

How to prove to HMRC that you was not self...

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Hello everyone,
My friend needs an advice. My friend  worked for a company(as a cleaner) on a part time basis. It is been for a couple of years. Recently she has received a letter from HMRC stating that she was self- employed for last 7 years and failed to submit tax return with a huge amount to pay. The thing is she never was a self- employed, she was paid by the company on her account monthly, sometimes with delays. No payslips or P60 was provided to her and she didn't ask for as she didn't know the system and her english was very poor. What she can do now?  I would appreciate any advice.

Replies (32)

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By johngroganjga
22nd Sep 2014 18:33

So she was in fact self-employed and HMRC are right in principle, although they are of course completely in the dark as to what her actual earnings were so their estimates and calculations may well be wildly exaggerated.

Has he kept records of what she was paid?  That will be the starting point for her response.

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Replying to johnhemming:
RLI
By lionofludesch
22nd Sep 2014 18:43

First things first

johngroganjga wrote:

So she was in fact self-employed and HMRC are right in principle ......

Well, I think we have to establish some facts first.  I don't think it's at all obvious whether this is a case of self employment or one where the employer seeks to "minimise" his PAYE liabilities.

Do we have anything in writing at all?  Was he told the hours she was obliged to work ?  Did anyone give her instructions ?  Could she send a sub to do her work ?

Even more crucially ... How much tax is at stake here ?

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Replying to johnhemming:
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By Kistochka
23rd Sep 2014 12:09

not self employed

lionofludesch wrote:

johngroganjga wrote:

So she was in fact self-employed and HMRC are right in principle ......

Well, I think we have to establish some facts first.  I don't think it's at all obvious whether this is a case of self employment or one where the employer seeks to "minimise" his PAYE liabilities.

Do we have anything in writing at all?  Was he told the hours she was obliged to work ?  Did anyone give her instructions ?  Could she send a sub to do her work ?

Even more crucially ... How much tax is at stake here ?

Nothing in writing. She had to work when the company had a client. She was given instructions. Only her could do a work no sub. HMRC calculated a charge for late submission £2800 per year

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Replying to johnhemming:
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By Kistochka
22nd Sep 2014 18:44

She was treated as a employee and now it is a big surprise for her that she is a self -employed. She was paid by the company £250-300 a month on her bank account which she closed a few years ago, but I think if needed she can retrieve it. 

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By johngroganjga
22nd Sep 2014 18:48

But she wasn't treated as an employee because she was being paid gross, as she knew full well at the time.

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Replying to John Stone:
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By Kistochka
22nd Sep 2014 18:55

she didn't know that

johngroganjga wrote:

But she wasn't treated as an employee because she was being paid gross, as she knew full well at the time.

That exactly the thing that she didn't know

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Replying to Kistochka:
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By [email protected]
14th Jun 2017 19:54

I have worked for my stepdad, for many years under the impression that I was paye, he has now told me I should look after my own accounts as i`m self employed, he never told me this, one of his companies went down, that one i was paye and he set up another but never told me any different re: employment status, what do i do ?

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Replying to John Stone:
RLI
By lionofludesch
23rd Sep 2014 20:03

Yes - But ......

johngroganjga wrote:

But she wasn't treated as an employee because she was being paid gross, as she knew full well at the time.

At £250 - £300 a month, she would be paid gross as an employee, if she declared it as her main job.

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By dropoutguy
22nd Sep 2014 18:59

Even if she knew

tax was not being deducted, that does not mean it was not an employment.

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Replying to WhichTyler:
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By Kistochka
22nd Sep 2014 19:03

income was within PA

dropoutguy wrote:

tax was not being deducted, that does not mean it was not an employment.

What if her income was within personal allowance for those years? Does it make any difference?

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Replying to SJRUK:
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By duncanedwards
22nd Sep 2014 20:16

Tax

Kistochka wrote:

What if her income was within personal allowance for those years? Does it make any difference?

 

Exactly:

SPA in 2005/06 was £4,900.  £300pm = £3,600pa

 

(Think it was less than NI LEL too.)

 

I would have thought that was your starting point in discussions with HMRC.

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By ShirleyM
22nd Sep 2014 19:01

Still a full time student?

... and only 2 yrs  part-time work in 9 years? Where does she get the money to live on? That's the question I would be asking if I was to help her.

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Replying to johnhemming:
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By Kistochka
22nd Sep 2014 19:05

husband pays for all her expenses

ShirleyM wrote:

... and only 2 yrs  part-time work in 9 years? Where does she get the money to live on? That's the question I would be asking if I was to help her.

She is funded by her husband

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By stokey
22nd Sep 2014 22:04

Which country she came from?

She is full time student since 2005!

what is her immigration status now?

 

 

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By chatman
23rd Sep 2014 07:06

Who was the employer?
Does she have the name or any contract details of the employer?

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Replying to DJKL:
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By Kistochka
23rd Sep 2014 09:54

New owner

chatman wrote:
Does she have the name or any contract details of the employer?

She has contact details, company is still functioning, but the company has another owner

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By chatman
23rd Sep 2014 10:34

Pass on the company details to HMRC

So can't she just tell HMRC she was working for them, and what the arrangement was?

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Replying to WhichTyler:
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By Kistochka
23rd Sep 2014 11:28

they insist on self employment

chatman wrote:

So can't she just tell HMRC she was working for them, and what the arrangement was?

She told HMRC everything as it was, but she cannot prove that she was employee as she doesn't have payslips etc. No contract, it was mutual agreement. I provide work-you do it. I guess it was just a lack of communication between her and the company. They thought she is self- employed, she thought she is employee.  HMRC insist that she was self -employed in that case they will charge her for late tax return, if she was employee they have nothing to charge as earnings were less than personal allowance. 

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By pauld
23rd Sep 2014 12:22

No tax at stake

As there is no tax to pay on these earnings, I would tell HMRC to b*gger off. Why do they insist on hassling someone such as a student earning a bit of cash cleaning - easy target perhaps.

Stand your ground - advise HMRC of the yearly earnings and that your friend was a student, funded by husband, they thought that they were employed, which they may of been, provide details of employer to HMRC. Stress the earnings are low and no tax due.

If they insist on completing a tax return, all you need to do is enter the total figure of earnings for each year concerned in one box on the Return. Anyone on here will tell you which box. appeal against any penalties. DONT PAY THEM A PENNY !

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By EmmaJee
23rd Sep 2014 12:23

@Kistochka

You still have not told us as asked by @stokey

What is your friend Nationality?

What is her immigration status now?

 

Has she ever the told immigration that she is self-employed to renew her visa etc?

If she did she must have sent proof of self employment to UKBA.

 

I know as it was common that time for new EU members nationals to become self-employed avoiding the need for worker registration card.

I guess @stokey is thinking on same lines..

 

 

 

 

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Replying to Smokoe Joe:
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By chatman
23rd Sep 2014 12:29

Self-employment not established

EmmaJee wrote:
Has she ever the told immigration that she is self-employed to renew her visa etc?

If she did she must have sent proof of self employment to UKBA.

I don't think it has been established that she was self-employed. She certainly doesn't seem to think she was, and no-one has provided evidence that she was.

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Replying to Smokoe Joe:
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By Kistochka
23rd Sep 2014 15:39

Non EU

[quote=EmmaJee]

@Kistochka

You still have not told us as asked by @stokey

What is your friend Nationality?

What is her immigration status now?

 

Has she ever the told immigration that she is self-employed to renew her visa etc?

If she did she must have sent proof of self employment to UKBA.

 

I know as it was common that time for new EU members nationals to become self-employed avoiding the need for worker registration card.

I guess @stokey is thinking on same lines.

She is  Non EU. She is an international student who studies at university. Never used self employment status for renewing her visa. 

 

 

 

 

 

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By justsotax
23rd Sep 2014 12:46

in an attempt

to put a stick in the ground...have the Revenue actually issued Tax Returns to be completed, and presuming they have, when (is it recently or years ago?).  Is it that the 'penalties' are in fact determinations made for earlier years? (following failure to submit a Return?).  And if they have issue a Return how did they now who to issue one too....who got the ball rolling? 

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By EmmaJee
23rd Sep 2014 12:54

@chatman we do not know that yet. may be she does not know what is self employed mean. From the conversation we know she is full time student since 2005 and her husband support her. we don't know if the husband is in UK or British. the whole conversation is vague the real questions are not answered by the OP.

everybody here with different backgrounds in accountancy want to help her but deserve more explanation if needed.

“To assume is to presume.”

Jude Morgan, Indiscretion

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Replying to pauljohnston:
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By Kistochka
23rd Sep 2014 15:58

husband lives here on visa

EmmaJee wrote:

@chatman we do not know that yet. may be she does not know what is self employed mean. From the conversation we know she is full time student since 2005 and her husband support her. we don't know if the husband is in UK or British. the whole conversation is vague the real questions are not answered by the OP.

everybody here with different backgrounds in accountancy want to help her but deserve more explanation if needed.

“To assume is to presume.”

Jude Morgan, Indiscretion

Husband is Non EU too. He is on visa, lives and works here. 

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By justsotax
23rd Sep 2014 15:57

when did the revenue

issue a notice to submit a tax return?

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Replying to Kylo Ren:
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By Kistochka
23rd Sep 2014 16:02

recently

justsotax wrote:

issue a notice to submit a tax return?

It was a few months ago for previous years up to 2012/13. Officer registered her and submitted tax returns based on average trading figures without her permission. 

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Replying to Tax Dragon:
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By Kistochka
23rd Sep 2014 16:12

undeclared income

Kistochka wrote:

justsotax wrote:

issue a notice to submit a tax return?

It was a few months ago for previous years up to 2012/13. Officer registered her and submitted tax returns based on average trading figures without her permission. 

Officer told her that he has information from different sources that she was in receipt of undeclared income and decided that she was a self employed, then registered her as a self employed and now she received a letter with amount due for previous years. As she didn't work at all during these 9 years except for the company (approx 2 years), she thinks that the company treated her as a self- employed in their books. She thought that she had been employed by the company. 

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By Kistochka
23rd Sep 2014 16:22

another question

As an international student she was getting some help from her family. Every time she went home she was given some cash (£2-6k), on arrival here she was putting it on her account. Would be a letter from her family sufficient to show where the money came from?

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RLI
By lionofludesch
23rd Sep 2014 20:09

Never heard such nonsense

Tell them to go away and if they don't, you'll take it to a tribunal.

HMRC have no case at all.  They have absolutely no evidence of self employment and - equally - none of employment.

Add to that the fact that no tax is due and they're just seeking to charge penalties, they're just beginning to look like bad losers.

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By Ruddles
14th Jun 2017 20:13

A perfect example of why "jump to last post" needs to be reinstated. Let's see who else wastes time in trying to find what brought this thread back to life.

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Replying to Ruddles:
Tom Herbert
By Tom Herbert
14th Jun 2017 22:57

I have no idea why this showed up again... thread closed.

(and Ruddles, jump to last post is on the development team's list - hope to have it soon...)

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