AIBU to be cross when self employed people use accountants to manipulate their earnings?

[donkeyderby]

Like the people I know who manage to get free prescriptions and free school meals, thanks to clever accounting, while living in swanky houses in nice neighbourhoods. One partner is the self-employed person, the other becomes 'company secretary'. The wages supposedly get ploughed back into the business, which necessitates the purchase of laptops, i-phones, gardeners, cleaners etc., etc., all through the business, yet none of it really used in the business.

And all those builders etc., who ask to be paid in cash to avoid tax.

Surely the tax avoiders and evaders must be stopped as much as the benefits cheats?

I don't evade tax - I stay well within the law. I don't claim free scripts, or free school meals. I do, however, use the tax rules for limited companies as much as I can - in my first year in self employment I walked away with 16k more than I did the previous year when I was PAYE - same hourly rate, the difference was all tax

I'm not cheating the system, and the only benefit I get is CB - but why would I voluntarily pay 40% tax on everything when I don't have to?

You clearly have no
Idea what you are talking about. A chartered accountant (a legal requirement for a limited company) cannot do what you are claiming. Do you really think being self employed is that simple?

I now ALOT of self employed people but don't know of a single one claiming free school dinners or free prescriptions!

Like Karmann says an accountant is unlikely to manipulate the books illegally.

Gahhhh! All those people not breaking the law! They drive me maaaaaaaaaaaad!

They're DEFINITELY going to mythical Hell in a mythical handcart...

Who said they can manipulate the books 'illegally'? Not me. There are lots of loopholes to be exploited perfectly legally. The MP's exploited these to their full advantage, perfectly legally. It just wasn't right or just.

I am self employed so I know it's not 'that simple'.

Unless things have changed an awful lot since I was last self-employed, you can't really buy very much for the business unless you actually use it for the business. And free school meals? Really?

It always amazes me how people 'know' so much about their neighbours, how much they earn, what their houses are worth, what they spend their money on ...

Not sure how you managed that TakeYourFun. If you stepped out of employment into self employment, and are doing the same role(s) as you did before, then you should be operating under IR35 with its effective 56% tax rate.

You cant 'stop' tax avoidance OP, you can only change the tax rules to try and catch more people in the tax net. Which in effect is just raising taxes. So lets be honest - what you want is to stop tax evasion (done by the rich) and increase taxes (on the rich), rather than focus on those who cheat benefits (the poor).

BTW - I dont know anyone who claims free school meals etc who doesnt absolutely have to.

My DH runs his own business, and yes I am company secretary, and yes we put as much through the business as we can. We each take a salary of £4,600 a year and the rest is classed as dividends. For the hours my DH works he would be earning upwards of £60,000 if he was employed by someone else. He gets nowhere near that as the business could not support it, but we are providing employment for 12 people. Our accountant queries everything we put through the books. If anyone knows of an accountant who could help us to put more through the books, please let me know........

Absolutely agree with coatgate and others - it seriously irritates me when people make this accusation about being self-employed - NO professional accountant would risk their career/integrity by 'fiddling' the books.

People are just using allowances that they are allowed by law to take.

I do not break the law. I strictly declare everything to the penny and I do not use fancy schemes either but I DO use my tax allowances though and structure my earnings to maximise my use of allowances.

I have had 3 tax enquires in the last 5 years and that is why I declare everything properly. HMRC take special interest in people who run their own business.

I know Ladybiscuit who are these people that give their neighbours a full run down of their financial situation. My neighbours get a smile and a hello and if they are lucky a benign comment about the weather

3 full enquiries Beenbeta? Or just 3 requests for clarification?

Someone has got it in for you I think!

OP if you are self employed yourself then surely you are also using an accountant who can help you to submit your books in the best way possible for your circumstances? If so, why are you having a go at other self employed people?

Don't get it...

Karmann

There is not legal requirement for a company to have a Chartered Accountant.

Really proper enquiries. I have clarification questions and requests for further info every year.

OP you are being niave and a bit silly. A chartered accountant will check every receipt and payment in your books - they are so straight, there is no way they would risk their own livlehood to fiddle anything. It is simply not possible these days with the HMRC anyway. What a good acountant, and a sensible business person will do however, is use the tax allowances to pay the minimum amount of tax allowed under the law. For example, buying company vehicles or plant at the time in the tax year that it is most benificial for your allowances for that tax year. Are you seriously suggesting that my husband pay MORE tax than he legally has to?

It is very irritating to hear PAYE wage slave making accusations about the self employed, when in reality, the (vat/CIS etc) paperwork involved would make your head spin, never mind the NI/VAt we collect on behalf of the govt. You have no idea, so please, keep your ill informed opinions to yourself.

BTW - I get free prescriptions - because of a medical condition I have - did this thought occur to you when you started slagging of people who employ other and contribute millions to the economy?

DonkeyDerby..I can see the points of everyone here, and i don't know about the free school meals bit,but there is another point to be made here..

I know that the majority of self employed people are totally legit (like myself), However
it IS possible for some to 'lose' or 'hide' their profits,.. A few years back,after DS2 was born i became involved with the CSA, We were trying to get a bit of maintenance from XP
He filled out his various forms, but they couldn't touch him despite the fact he was driving around in a BMW and lived exceedingly well..
This, the CSA admitted was because he was self employed, they referred to him as "one of those"..I actually said that he had a clever accountant and they agreed.I knew how much he was earning, yet the CSA couldn't even get me an extra tenner.

I'm sure i'm not the only one to have experienced this..Some accountants do cook the books!

You speak bollocks OP. DH is self employed and the amount of tax and vat payments he makes mean we live a very ordinary life, certainly not one you describe.

I think Op has a point. Having worked in accounts for many years I am shocked at some of what I see. None of it is 'illegal'. Just some accountants are more 'lax' than others.
My closest friend made me laff. Her dh was complaining at a party that his previous accountant was 'nigh on dodgey', wanting him to claim extra expenses etc, claiming that he knew ways to 'wiggle this and wiggle that, to reduce his bill'. Her dh didn't want to know.
15 other people were scrambling around for a piece of paper and a pen, to note down this accountants number.
Every acountant is different. Some are very very strict. some are more leninat. some are out and out right dodgey.

If you didn't know that some people, (in business,self employed, whatever ) are verging on being crooks in their business, then you are naieve. nothing actually illegal, but borderline.
And if you think accountants aren't the same,then you are also naieve.

I have seen some bloody great tax avoidance, in my time. I was impressed at the genious of some of it. Shocked and saddened, but impressed.
Surely this doesn't surprise you ?

I used to be freelance so self employed for tax purposes. I tried to do my tax return myself and ended up with a tax bill for £5000 more than I had earned because I filled it out wrong. I used an accountant to help fix the problem so that my tax bill was not over 100% of my earnings. Was I being unreasonable?

I don't have a big house, I drive a 10yr old putt putt, I pay for my prescriptions and dd does not get free school meals. Are you suggesting I should be treated as a criminal for wanting to pay tax at the same rate as everyone else and not at a rate of 145%?

I reckon this falls under the umbrella of what you are talking about... I know 2 separate families who use self-employment to claim benefits.

One lives mortgage-free (his parents paid for their 700K 3-storey house) and they run a business which they show as making very little turnover. To be fair, they don't make a lot of money from their business but it eats me up a bit that they get their son's nursery place paid for by the taxpayer and they get a sizable chunk of working family tax credit (I don't know exactly how much but he said 'a few hundred a month').

I admit I am envious - I work full-time, pay a childminder (no help with costs) and have a pretty chunky mortgage on a 2-bed flat. I do get £40 a month tax credit which I am very grateful for but the system just doesn't seem fair!

The other person I know is a single mother with 3 teenage kids who basically lies on her tax return to get the maximum tax credits. Again, she doesn't earn a fortune but that's because she only does a few hours work a week yet claims tax credits as someone working full time. She therefore gets what she terms as 'a small fortune'. I'm sure it's not uncommon but it winds me up that she is SUCH a snob about chavs and immigrants and how they sponge off the state when what she's doing is no different.

I've not got any of these problems yet - I haven't made a profit yet (1.5 years completed on tax returns)

I have noticed the tax return for 2009/10 was easier to fill in than the previous year.
But until I start taking a proper amount of money through the till, I'm doing it all myself.

I don't know how i'd cope without the computer, thouhg - finding each individual bill and receipt is very annoying.

I don't free prescriptions either. Maybe I should look into that?

I forgot to add I don't get tax credits and the only benefit I get is child benefit.

Well, how about turning it around? DH is self-employed and I am too (seperate businesses - I only do a bit of Avon but still do my tax return as required). We earnt approx £8,500 between us last year. Yes, we do get NHS exemption certificates but not free school meals (as we qualify for working tax credit). We should qualify for Council tax benefit and were once awarded the full amount but then had it taken away as DH couldn't provide the proof of income they required simply because he is self-employed. We also have a nightmare every year with tax credits. We have a mortgage and don't get any other help.

Sometimes I wonder if the government would rather no one was self-employed as they certainly don't make it easy. It's certainly not the free ride you describe.