Employment Tax Expert

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How many meetings did it take to come up with this little gem, backwards and forwards it went the language changed and in certain circumstances toned down – what may you wonder caused such debate, well it’s “Your Charter”. Am I the only person to worry about this title?

Have you actually read “Your rights” the ordering of which cause this employment tax expert some concern. For example, it ranks only third as far as HMRC are concerned but it is the fundamental bedrock of our judicial system – that you will be treated as honest (or in legal speak innocent until you are proven guilty). How many of you have been through employer compliance reviews, tax investigations, tax enquiries etc where it is blatantly obvious that the premise is that you are guilty of some sort of wrongdoing until you can prove that you are not and how much time, cost and stress are you put through? but according to point 9 they will do all they can to keep the cost of dealing with them as low as possible – absolute rot if you look at the Arctic Systems case.

So while we are on the subject let’s have a look at some other rights of the tax payer – number 8, that HMRC will accept that someone else can represent you – now come on how far do HMRC want to alienate everyone. In the past good relations could be struck with Inland Revenue officials, now we have compliance officers referring to agents as obstructive – why because they disagree with HMRC – well tough, formal representation should never be overlooked by any company or individual as point 5 perfectly illustrates. Point 5 – you can expect HMRC to make decisions in accordance with the law – obviously not written by someone who has ever been involved in an employment status “discussion”. Case law is fundamental in employment status but so many employment status inspectors merely quote internal guidance on these cases rather than having the time to fully evaluate them. I had one recently where I had to bite my tongue as they had actually added words to a quote from a tax case and then used it totally out of context. This is a worrying trend and should always be something that clients are made aware of because so many see HMRC as this all powerful body when in fact there is a lack of a consistent approach to cases, a lack of genuine training in case law and its not in most circumstances the fault of the individual officers. These people are driven by results and especially in the current climate with the national debt in the hundreds of billions this policy is not going to change.

So the moral is, yes a nice piece of hypothetical paperwork but devoid from reality and who will be monitoring this and changing the mindset of compliance officers, pre visit – taxpayers are “INNOCENT UNTIL PROVEN GUILTY”

How can it be possibly argued that this was ever going to be a genuine consultation exercise based on looking after the greater good of the subcontractor when you look at the nitty gritty and find out that the “consultation” proposals basically only deem them to be employees without any employment rights – yes welcome to the “it’s not all it seems” show!

HMRC are trying to rail road all self employed workers in the Construction Industry down the route of being employed by having to pass certain tests – now you would think that these tests would have come from tried and tested case law but no HMRC can’t win these cases so like a petulant child let’s take our ball home and return with the proverbial sledge hammer. The proposals aren’t going to work on so many levels and you can see that they will be attacked from all angles, health & safety, employment law etc etc. Now as I have always maintained HMRC resources would be better spent attacking those well publicised schemes that blatantly advertise that they are circumventing the rules, whether it be by off shore arrangements, taking the proverbial out of the Dispensation system or by the debacle of the £15 per week per subcontractor arrangement (pushed by companies that are CIS registered – so let’s have a collective thought process on that one – not difficult to deal with!) that so obviously don’t work – HMRC visit the contractors using these schemes and look at the reality of what is happening – nothing changes when they move to this arrangement – it should but it doesn’t in practice and challenge these people because these are the ones ripping off the Treasury not John Smith the bricklayer.

I was talking to a VAT colleague of mine who was commiserating with me about the fact that the Inland Revenue have got “all these new powers” and the fact that Customs have had them for years. The reason for this empathy – they knew that it had taken sometime for things to settle down, cases to be tested etc in relation to over exuberant (let’s be generous, it’s Wednesday!) officers, well be warned here we go again in relation to the Inland Revenue.

It is important that tax payers and advisors are not simply intimidated when faced with what amounts to threatening behaviour by compliance officers – this employment tax expert for one would like to hear your experiences of the new regime. Put in simple language the top brass at the Revenue are quite frankly bricking it, in relation to what may occur in the first 12 -18 mths – they are anticipating problems but what have they done to reign these people in – very little at ground level. Some are already running around threatening people with formal action even when they have no legal obligation to provide information – don’t get me wrong, we are not talking about offshore accounts and banks these are people who are not under review. One case brought to our attention this week was where individuals have already provided a response, regarding contractual terms of engagement, but the compliance officer doesn’t like the answer – ie it does not agree with their opinion, as it yields no money, so they are now threatening these people – well guess what we’re not standing for this and we urge all our readers to be aware of this sort of abuse of power and get in touch – if we don’t bring these people to account no one will – you have been warned!

21 people were arrested in dawn raids by HMRC, working with the police, investigating a multi million pound Construction Industry fraud. If you recall I warned readers about convoluted schemes aimed at subcontractors – there are a lot out there and it’s not a simple question of these guys trying to be self employed there are plenty of schemes out there that involve subcontractors being on PAYE and being encouraged to claim excessive expenses – big style problems occur when the organisation that runs them disappears as is the case in question!

and disappear they do – leaving the subcontractor really in the mire, as no PAYE/NIC is ever paid over to HMRC even though it has been deducted from the subbies – you’ve been warned – if it looks too good to be true, it probably is and don’t expect sympathy when a tax investigation heads your way as HMRC will want their pound of flesh from somewhere and effectively you’ve been left holding the baby!

This employment tax expert says quite simply don’t go for convoluted structures, keep it simple, factually correct and you can still save money and beware schemes like those mentioned whether you be a contractor of subcontractor – it can catch both sides!