Helen Fospero makes yet another Brit telly presenter to win IR35 case against taxman UK TV presenter Helen Fospero has claimed the latest victory against Her Majesty's Revenue & Customs (HMRC) over its off-payroll tax clampdown, winning her appeal against an £80,000 payout under IR35 rules. HMRC had deemed her liable to pay the additional income tax and national insurance contributions due to her engagements …
I asked HMRC via Freedom of Information what it's cost them to mount these legal proceedings. They know what they spent on external lawyers (ie. quite a bit), but can't say what it cost them internally to investigate, build the case, go to the tribunals etc. Apparently they don't use timesheets or any sort of project accounting.
So in short... if someone inside HMRC wants to bring one of these cases, it doesn't really "cost" anything. They might spend a million quid to collect a thousand, but they wouldn't ever know that - they'd just come back to the office with the thousand pounds and celebrate "coming out on top". So expect more frivolous law suits to take place.
Your hard earned tax being well spent - not on the NHS or schools or whatever else you care about - but on HMRC employees and their laywers. Great.
It goes against the grain to comment in favour of HMRC, but I suspect their argument would be that the million quid is spent to collect a thousand, and many subsequent thousands if they win*. How they justify it when they mostly lose, I can't imagine.
* cf "Men are not hanged for stealing horses, but that horses may not be stolen" – George Savile
I work in the oil industry, currently on a 6 month project which is running a bit behind .... but it is a one off project and not a staff position.
The oil industry in Aberdeen has hundreds of Limited Co people working in it ... and many of them have been with the same company in the same role for years. I agree these people should not be using PSCs as they are staff by another name.
I had a chat with HR yesterday, and it seems that after 1st April they will not be taking on any Ltd Co contractors whether short term or not.
How do they complete short term specialist projects with the staff they have, what happens to the 50% of people working there that have done for years after 1st April and how will that affect business?
Answers on a postcard
"...they are staff by another name, but without recourse to they are staff by another name, but without recourse to Holiday\Sickpay & other benefits.."
but receiving payment in cash up front in lieu of Holiday\Sickpay & other benefits.
FT Properly FY
The Limited Company engaged to complete a job still has an obligation to meet employment law regards holidays, sick pay, benefits etc for all employees. How it chooses to meet those obligations is a matter for the board of directors to agree with the employees.
What? Who are the contractors who accept payment in cash, up-front? Contractors typically work on 30 day payment terms so you get paid several weeks after the end of the month rather than on the last day of the month. It's not uncommon to work on 60 day terms.
Your Ltd has these obligations but the point is, as an employee you still get paid when ill or on holiday or bank holidays. A typical employee is perhaps getting paid for being there about 85% of the time, and that's not counting maternity or paternity or longer illness.
“
It would depend on circumstances. Possibly she wasn't engaged for the period that required a stand-in.”
On the show called Lorraine!!!
ITV created a show based on her and have her working on it yet she’s not employed by them. That’s very fishy.
The sooner the correct tax is paid and these scams end the better.
>>Most of the contracts I was on, stated that you could not substitute yourself for another (Cheaper) individual.
You want to avoid clauses blocking RoS (right of substitution) in contracts and fight to remove them if at all possible.
Of course RoS clauses normally include wording "suitable" or "mutually agreed" which means if you can't be available, you OFFER a substitution but they do not have to accept it.
I know several people where HMRC have ben very aggressive in chasing tax revenue only to have it proved that they had made a mistake.
I know of one case where a builder was made bankrupt for £22k only to later have it proved that HMRC owed him almost £25k. They had no accountability for destroying the guys life because he couldn't find any legal team who would take on HMRC.
As for "However, as contractors, they are not entitled to the same holiday and sick pay benefits."
Surely by that test alone, they do not have the same conditions as salary staff so are not employees
It wasn't insolvency litigators,
The guys own accountants told HMRC they had made a mistake.
HMRC made the guy bankrupt to get their pound of flesh. even though it was argued in court that they had made a mistake.
When the dust settled, the guy couldn't find a lawyer, to claim damages back from HMRC.
And for the record. I have been around long enough to have plenty of "stories" without needing to make them up
There's obviously no basis for a claim of barratry. There was a case to answer, so regardless of the outcome it's not vexatious in any way.
An appeal is inevitable given the conclusions reached are at odds with the facts as admitted by the tax evader. If the perp characterised their employment as employment, it's simply bizarre that a tribunal dismissed the confession of guilt.
Of course they'll appeal, this one is a slamdunk they've somehow managed to squander - the perp admitted to meeting the exact definition of a temporary employee, and doesn't have a single indicator of self employment.
The reality is and remains that most 'contractors' are simply evading - not avoiding - tax. If you're one of them, put the tax money aside and don't spend it, because it's practically certain you'll face a hefty bill in the next two or three years. Oh, and you're losing out on the benefits - sick pay, etc - which you're going to end up paying for anyway.
I think you are underestimating the HMRC. The intention of this legislation is to make people who can't afford to fight the HMRC pay more tax. This is much more efficient than taxing large corporations who can provide politicians and senior HMRC civil servants lucrative private sector jobs.
The tax rules here are actually incredibly simple. It's the gyrations of people trying to avoid tax by circumventing the rules which make things appear convoluted.
Short term employment exists. People employed by more than one employer exist. Being self employed is rarely the case.
Tax avoidance is legal, tax evasion isn't. Gyrations ensue when people try to push the line between them.
Isas and so on aren't tax avoidance, in an case. The intent of the law is to make people save more, so people are complying with the spirit of the law as well as the literal meaning. Might as well claim poor people are inveterate tax avoiders because they spend their money on food rather than taxed luxuries.
If you put your money into a normal savings account and the interest you earn is greater than £1000 you will pay tax.
If you put the same money into an ISA account and again the interest you earn is greater than £1000 you will not pay any tax (as all interest/earnings on an isa are tax free).
Thus you have legally avoided tax.
Now if you are a director of a company that is listed on the stock exchange you can hide any shares you own in an ISA.
However if you are running a small company like myself I cannot do the same trick.
Thus the big companies get an automatic advantage over small companies.
Ask yourself why don't the government close this loophole, I'm sure it has nothing to do with donations.
HMRC are heartless, vindictive and believe themselves to be above the law. Many years ago I had a long running fight with them. They'd decided that as I'd earnt 100k one year and paid tax on it voluntarily I'd earn the same the following year. Without any checking, form filling or request for information they issued a bill for 36k which they insisted I paid. Long story short, it took a year to sort out, massive accountants fees, endless meetings and one hell of a lot of stress. I think is cost me personally 5k in professional fees overall.
It ended in a final meeting at the Accountants office where they settled for a 150 quid liability. This wasn't really owed but was agreed so they could save face and say they'd got a positive result from an investigation. Agreeing this went against the grain but it got them off my my back for a few years. Arrogant doesn't begin to cover it.
I am another that can attest to the almost criminal way the HMRC works. years ago as a contractor they approached me in regards to a tax return from years before, claiming that I owned them 9.5k. they even had the audacity to send the bailiffs to my house with a letter of disrestrate (remove items from my home to the value of) about a week after the initial letter. I dread to think what might have happened had i been home that day, as it turned out the fcukers owned me 950 quid.
it seems the HMRC are putting the values in the wrong columns on the spread sheet!
This is a constant, complex game of whack-a-mole where HMRC keep defining and re-defining their definition of 'employed' vs 'self employed'. All this does is get contractors to revise the wording on a bit of paper known as a contract, to keep them the right side of the line. It also lines the pockets of legal teams, costs a fortune and drags everyone down when it goes to court.
This just goes round and round in never-ending circles then, as the gamekeeper keeps telling the poacher how to avoid being caught by them. Surely from any distance this just looks absolutely barmy. What is the difference between a tradesman (eg a bricklayer) and an IT consultant? From a distance the brickie is OK but the IT consultant isn't simply because IT projects take longer - sometimes several years. I struggle with that, as they both have a lot in common (pension, holidays, risks, etc etc - same old stuff).
It does make me wonder why HMRC cannot maintain a set of 'minimum salary' scales (just watch the jobs market and the salaries on offer) and then say "if you are a consultant doing job x then your minimum salary is y and you must pay yourself that, and all tax and NI arising". If they did that people would abide, and everyone would surely be happy...….. maybe......
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