HM Revenue & Customs have sent out a book to all tax advisers detailing the first major changes in the design of the UK tax return for ten years.
There's one change I would have really liked. I'd have loved to have seen boxes added that would have required the identity of the five biggest customers of each self employed person submitting a tax return to have been disclosed unless the customer in question comprised less than 5% of the total turnover for the year. I'd have added the same box to corporate tax returns as well.
Why? Because nothing I can think of would weed out information on those who are in disguised employment than this would have done. This abuse needs to be stopped. That's one reason.
There's another reason as well. Most tax fraud is in the top line on small business accounts. Requiring more detailed disclosure on this information would help identify where this might be happening.
And please don't say this would be an additional burden on business. Knowing who your top five customers are is vital business information. Any business would benefit by knowing this if it does not already.
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Interesting idea Richard. Not sure I agree with you though, but perhaps I’ve misunderstood. On two counts:
Firstly you suggest the main rationale for this would be to identify disguised employments. Would it? I guess if there were only one or two clients/customers in the year it would certainly legitimise questions being asked but that of itself doesn’t make someone an employee. Take me for example:
I am frequently engaged to present talks and seminars for accountants. Some course and conference organisers book me on several occasions each year. In my first year of self employment I presented almost 20 sessions for one specific client. They would certainly have been in my top 5. As would a firm of accountants that engaged me to mentor a number of their managers and partners over the course of the year – one at a time and by ref to my terms and fee rates. In neither case was in ‘disguised’ employment.
I note also that you suggest a simple list of the top 5. This could be counter-productive as someone who does have a ‘disguised’ employment with one client that provides 90% of their income would be able to list their other 4 (tiny) clients alongside the big one thus confusing the issue. To overcome that you’d need to allocate turnover to each of the 5 too.
And I don’t follow your second reason either. I would have thought that more mistakes (deliberate or otherwise) either from the exclusion of income or the inflation of expenses. I’m unclear how listing one’s top 5 clients would help expose either of these.
Mark
Why not place the burden the other way around rather than give people one employment status for taxation and another for the benefit of big business?
If he contract is a contract of service, and not for services, then should the disguised employee not have all the rights of a job contract pari pari with other employees in the firm – holiday pay, Paterity pay, Maternity Pay, sickness benefits etc… – And the right to employment rights tribunals, fair training, management supervision etc..?
All this about the number of clients is nonsense.
What matters is whether the contract really IS one of service, or whether is it clearly delimited, and on the basis of a single project – a contract for services.
I mean your how would your boxes determine the status of many self employed occupations – From Acting to Gasmen etc… its perfectly possible for the self employed to be under the contract of one firm, agency, studio, or project.
The reality is many people are now caught in a trap – they are in reality self employed – engaged in a clearly delimited scope for a project and for services – not of service for an organisation, and thier occupation is one of multiple serial engagements, but taxed as if they are employed with none of the rights.
Why are not employment rights – backdated thus given to these ‘dodgers’ if so caught?
What is really occuring is a whole class of people are forced into self employment, many series of temporary contracts of a period of years as a way of life.
Richard
Hey, Look!!
Still no comments at all? From anyone? Nobody cares for your twaddle, matey! You are talking to yourself!! Which is well deserved as you are taking shite, and stifling any debate. You are nothing more than an attention seeking self-publicist with nothing to say which is of interest to anyone!
I don?t disagree with you Richard, however, and this is my issue, IR35 to which you are referring, was another cop out by this government, just like the non-dom issue we are seeing them climb down on even more so again, see accoutancyage, they pander(ed) to big/wealthy business, who incidentally insist you use a Ltd company structure to work for them and this way they avoid PAYE, Holiday, Sickness, SSP, SMP, SPP etc.
IMO, it is this government and big/wealthy business that are the avoiders, stop that then IR35 becomes a non issue because they will have to employ the staff and small one person companies caught by IR35 cease to exist, that simple.
By protecting/pandering to big business at the expense of the ordinary employee who is forced by big business to form one person limited company, so lets stop beating the little guy and be honest about where the abuse is Richard, and the rest will follow.
To Peter Cole
You’ve spent all week trying to say that this is a terrible blog because no comments appeared.
How about this for an explanation? I was on holiday. I posted one entry a day in advance of going, just to keep things ticking over. And whilst I was away I was sane enough not to open my lap top once, let alone moderate comments.
You will find quite a lot of comments posted today, inclduing all your own. I hope that satisfies your desire for publicity.
I’m pleased that I provided you with such amusement
Richard
Mark
I wrote in haste. I would, of course, require the list to be supported by numbers.
I agree with you – even having up to 50% of turnover from one client does not prove a disguised employment – but it focusses enquiries more appropriately I think than the current question 6 on the P35, for example.
I am seeking to keep enquiries off the wrong backs with this question. It’s not perfect – but it might help.
Re yout second point – I agree that expense errors happen – but there’s already quite a lot of analysis needed for these. I have seen more than enough false claims in my time – but what really worries me is the income that never hits a return – and so increased focus on turnover accounting seems appropriate to me as a way of tackling the top line where I think most tax evasion really takes place, and in preventing abuse of the wrtong structures which has been a cause of the increase in income shifting, for example.
I know we are on the same side – make sure people pay the right amount of tax. I believe the appraoch I suggest better than the wholoe IR35 approach.
Richard