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to be considering reporting someone for tax avoidance

(143 Posts)
chloesbaby Mon 14-Jun-10 13:08:41

A friend of a friend, who I have known for years but have never become close to, has been self employed for about 15 years since having kids.
She is a private tutor. I have recently found out from my friend that she has NEVER registered as self employed and doesn't pay tax. angry
She earns about 30K, her kids go to private school and they have a really nice lifestyle (she shops at Jigsaw, Jaeger, etc).
I am absolutely fuming, esp as I am also self employed and would never consider doing something like this.
What would you do?

Gl4dys Mon 14-Jun-10 13:11:36

I probably would too, I hate people who con "the system". It isn't the system is is you and me they are conning

paisleyleaf Mon 14-Jun-10 13:14:03

Crikey. How would anyone want to live like that? Constantly looking over your shoulder worrying about when they do catch up with you.

Lauriefairycake Mon 14-Jun-10 13:14:58

Any chance she earns under the liability for tax though?

You don't have to register for self-employed if you're not liable for tax. I have loads of friends who don't earn enough to pay tax once they've taken off their insurance, training, equipment etc.

cupcakesandbunting Mon 14-Jun-10 13:16:15

I would snitch. It's one thing playing the system when you're struggling to feed mouths (but still wrong) and quite another when it's funding a "nice" lifestyle.

BigFatSepticToe Mon 14-Jun-10 13:18:02

how do you know she earns £30K ??

when you say tutor, do you mean like exam prep, or full time home teaching or what?

Sullwah Mon 14-Jun-10 13:20:15

Do you really think that she can fund that lifestyle by being a tutor on 30k a year? What does her DH do?

How do you know she earns 30k a year?

Butterbur Mon 14-Jun-10 13:21:51

Technically this is tax evasion, and as well as paying the back tax she could be facing penalties and even prison.

Tax avoidance refers to legal schemes to reduce tax.

I thought you did have to register as self employed within 3 months of starting a business, even if you're not liable for tax, and complete annual tax returns. Basically the IR decide if any tax is due (and class 2 National Insurance contributions), rather than the tax payer.

There's also the possiblility of VAT being payable (although not if your estimate of £30k is correct).

thesecondcoming Mon 14-Jun-10 13:24:01

Message withdrawn at poster's request.

I'd grass in a heartbeat. The rules exist for everybody.

LittleMissSnowShine Mon 14-Jun-10 13:25:51

I do private tutoring too, as well as one on one adult literacy support, freelance copywriting and exam marking.

The tax threshold is only about £6000. If you're earning more than that, then you are liable for tax. You should also be paying National Insurance contributions.

Whenever I was still a student and hardly earning anything, I didn't put all my earnings through the books because it was hard making ends meet without being taxed and paying NI contributions on top of my fairly crap earnings. I definitely think that you should earn about £10k before you're getting taxed. hmm

But if you're right that this woman is earning upwards of £30k and has money to put her kids through private school and shop in high end shops, then what she's doing is illegal, unfair and immoral. Agree with cupcakesandbunting, one thing to avoid the tax man when you're really on the breadline, another thing entirely when you could afford to pay.

She's conning everyone else and she has no right to use public services like the NHS if she's not prepared to pay for it.

hairytriangle Mon 14-Jun-10 13:26:36

How do you know she doesn't pay tax, how do you know she is liable for tax, and how do you know what she earns?

BigFatSepticToe Mon 14-Jun-10 13:30:23

Im a SAHM, ex teacher, looking for a little part time job, and never dreamed I could earn £30k as a tutor!! I had thought a few hours here and there for exam prep would bring in a little extra holiday or christmas money.....I really can't see how shes raking it in, unless she is actually working F/T

but thats all irrelevant, and whether you report her or not, she is treading on thin ice, these people DO get found out and punished - perhaps you could tell her in a nice way about someone you heard about who got into serious bother with the tax man,let her sort herself out

ReneRusso Mon 14-Jun-10 13:30:26

I wouldn't get involved if I were you. But then I employ an illegal Brazilian cleaner and use Polish builders who aren't registered for vat.

jeee Mon 14-Jun-10 13:30:48

You report her, and the Inland Revenue aren't going to put a warrant out for her arrest. At most they'll investigate, and make their own decision, and at least they will do nothing (I bet they get loads of tip-offs). But you'll probably feel better, and if she really is up to her neck in tax evasion, she'll have to pay up (and will, incidentally, have a criminal record). So I'd say report. Too many people think paying tax is for other people.

MintHumbug Mon 14-Jun-10 13:35:11

Laurie - you still have to register as self employed though (well you did 5 years ago unless its changed wildly since then)
Then you fill out your tax return and if you've earnt too little to pay tax, they send you a letter saying you owe them £0.00 (and sometimes if you've paid tax on your savings they sctaully send you a letter saying they owe you money)

As far as I know you can't just decide not to declare yourself self employed because you know for definite you earn under the threshold. You still have to declare it and then they tell you that you own them zero.

This is awful but I probably wouldn't report her as I would worry her kids would be the ones to suffer (don't know if she has a Dh who gets a salary from your post). If it would leave her destitute, although she's brought it on herself, I would feel too guilty about her children suffering.

bumpybecky Mon 14-Jun-10 13:36:53

Lauriefairycake that's not correct

you do have to register as self-employed even if you earn under the personal allowance and so don't pay any tax

Butterburr is correct about the 3 month limit too. They can fine you if you register after that.

OP - YANBU to report her

Miggsie Mon 14-Jun-10 13:37:54

I know someone like this, makes £40k cash a year and pays no tax...YANBU to report them.

NonnoMum Mon 14-Jun-10 13:38:50

Is she single? Who is paying the school bills? 30k isn't going to support a family AND put kids through school...

chloesbaby Mon 14-Jun-10 13:39:53

she does work FT from home, teaching maths (exam prep for kids). my friend who is very close to her told me her earnings, the fact she doesn't pay tax, etc.
her husband has a good job, so her money is on top of that, hence the lifestyle

MintHumbug Mon 14-Jun-10 13:40:44

£30k is quite a lot if you're not paying tax on it though.
It is like earning a salary of c£50k for normal people who pay their taxes in full.

Lauriefairycake Mon 14-Jun-10 13:43:43

hmm...maybe you're right. I know I don't have to as I'm a foster carer and the IR already know that.

scaryteacher Mon 14-Jun-10 13:46:01

I don't pay tax on the income from my property, because there are various write offs that I can use to reduce the overall liability. Does your friend know for a fact that this lady isn't doing that, but still submitting her returns? I can say I pay no tax on some income, but it is legal for me to be doing that; possibly the case here. Be careful.

chloesbaby Mon 14-Jun-10 13:46:07

i resent it as i am self employed and don't earn anything like 30K. I pay my tax and wouldn't consider doing otherwise. however, it is a difficult decision as i wouldn't want the kids to suffer and when i have been to her house she is a great host, generous, fun to be around.
but it drives me nuts as she obviously thinks it is just a bit naughty rather than out and out criminal

poppy34 Mon 14-Jun-10 13:46:47

Agree yanbu- report her. If your friend is wrong then she has nothing to fear from hmrc.

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