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.
22nd Sep 2014
How to prove to HMRC you was not self employed?
How to prove to HMRC that you was not self...
Replies (32)
Comments for this post are now closed.
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.
First things first
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 ?
not self employed
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
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.
But she wasn't treated as an employee because she was being paid gross, as she knew full well at the time.
she didn't know that
That exactly the thing that she didn't know
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 ?
Yes - But ......
At £250 - £300 a month, she would be paid gross as an employee, if she declared it as her main job.
Even if she knew
tax was not being deducted, that does not mean it was not an employment.
income was within PA
What if her income was within personal allowance for those years? Does it make any difference?
Tax
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.
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.
husband pays for all her expenses
She is funded by her husband
Which country she came from?
She is full time student since 2005!
what is her immigration status now?
Who was the employer?
Does she have the name or any contract details of the employer?
New owner
She has contact details, company is still functioning, but the company has another owner
Pass on the company details to HMRC
So can't she just tell HMRC she was working for them, and what the arrangement was?
they insist on self employment
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.
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 !
@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..
Self-employment not established
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.
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.
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?
@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 lives here on visa
Husband is Non EU too. He is on visa, lives and works here.
when did the revenue
issue a notice to submit a tax return?
recently
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.
undeclared income
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.
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?
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.
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.
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...)