Forgive me but if someone ignores MTD for three quarters and continues to use the tried and tested Government Gateway system, do they just get three 'points' and thus no financial penalties?
Not everyone affected is a hard-nosed tax dodger. There are actually some innocent victims. I know of a person from an African country who worked here in Social Work for councils via Agencies - on fairly low pay. Her first Agency recommended an Umbrella company which happened to be one that paid her NMW + loans. She had no idea she wasn't complying with the law.
She got shifted from one Umbrella company to another being reassured everything was fine. One of these Umbrella companies was based in Valletta - so not much chance of HMRC nailing them.
She came to see us for advice once she had the loan charge letter - and was stunned to learn she owed many thousands of pounds (which of course she doesn't have).
If you view it as a hilarious parody of Doctor Who (as opposed to the proper Doctor Who that would go out on a Saturday) you'll enjoy it more.
I've got a bet on that they visit Harvey Milk at some point. Then I've got a full house on PC bingo.
Secondly, the end of the article suggests that the difference between the Mallalieu case and your client's case is that Gemma's clothes could not be worn outside of the job. But that is not the case with all actors' clothes (e.g. if playing an accountant and wearing a suit). So, is the article slightly wrong on that point? Should it not be 'will not be worn' rather than 'cannot be worn' away from the job?
And, if so, given that warmth and decency wouldn't come into play as an argument against, could not a TV presenter claim for hairstyling and a jacket (if never worn outside of the studio)?
I think, as accountants, we are used to dealing with change - virtually none of it makes our lives easier - at least not at first. So I'll start planning for it when I know what it looks like. With MTD and the private sector IR35 roll-out coming up, we already have enough on our plates to worry about.
Churchill said 'keep buggering on'. What else can one do?
How will the average end-client know the new rules? If (say) an architect's firm hire a freelancer limited company directly, then they will probably just pay on invoice as with any other supplier. It's one thing for Public Sector bodies to know the rules, but the average private sector business will never have heard of IR35.
And if such directly contracted companies are let off, and only freelancers going through Agencies are affected, then maybe Agencies will just charge a finder's fee to the end-client and let the freelancer be paid directly by the end-client.
I guess this will all come out in the consultation, but I think the private sector won't take this lying down.
Also, we all know HMRC has limited resources. It will only take a few Agencies to take a chance with the law, in an effort to attract the best contracts and freelancers, and the others will feel obliged to follow or to see their businesses fail. Every accountant is familiar with the client who says "my mate gets away with it so why can't I?".
I think a lot of of us could see some point in RTI. Many businesses used their PAYE liability as an interest-free overdraft which only had to be cleared every April. RTI made this much more difficult because HMRC can now compare the PAYE due with the PAYE paid.
But I agree with your other points. If there is no tax to be paid quarterly, what is gained by quarterly reporting? I literally cannot see the point.
And can someone explain why MTD will bring in more tax? What errors (to HMRC's disadvantage) are we/our clients missing that will now be spotted in a quarterly report? Organised clients get it right anyway. Clients with time pressures are still going to give duff information in a rush.
It only seems to make sense if it gets linked to paying income tax/CT quarterly.
Good question, Adam. You inspired me to check the figures - and I got stuck on the first line - £20,000 income in 2016/17.
I'm getting about £2,628 for the Company (using £8,060 as the salary) and £2,874.60 for the sole trader. Can anyone help?
You are right - Rebecca's wording is wrong. But I think her calculations are right.
Talking of practical aspects and confusion (mine)....from what I've read, if a Freelancer with a PSC is caught by this new rule, and invoices/earns £60k, they'll end up with a deemed salary of about £60k (gross) paid by the Public body or Agency - and a P60 issued by the Public body/Agency showing £60k salary to put on their Self Assessment Tax Return.
Then, the guidance seems to say the PSC gets a deduction of the PAYE/E'ees NI already paid by the Public body/Agency when working out what PAYE/NI is due to HMRC through RTI. So this implies a payroll is being run by the PSC - presumably leading to another P60 of (say) nearly £60k?
Obviously one can't put two P60's showing pay of £60k on a Self Assessment Tax Return - when the PSC only invoiced for £60k, so I'm missing something.
Does/can the freelancer just take the net deemed salary amount from their PSC as net salary without the need for their PSC to actually run a payroll?
But then what would show in the PSC's accounts as a cost? Is it the deemed salary calculated by the Public body/Agency? Or don't we know yet?