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 heard a discussion on the radio about this. The tax inspector they had on said that a problem was the closure of local tax offices and the centralisation of the system. A local tax inspector would know that, say, 28 Acacia Avenue was a palace and would question why someone living there supposedly had an income of £5k a year, or why a takeaway with a queue out of the door every evening was so unprofitable. Someone 200 miles away would have no clue.

The above are of course tax evasion, and no accountant worth his/her salt would get involved.

The tax avoidance ones are annoying. I'm sure thousands of one man bands "employ" their wives and it is definitely true that many business owners only draw a minute salary.

Bil is a chartered accountant specialising in tax and he says that if one has the capital somewhere one can easily pay oneself a pittance and claim for this, that and the other.

Tangle - false self employment is a big problem and in reality the failure of ir35 has not helped.

It is very hard for HMRC to prove cases when engagers and contractors both get a benefit from avoiding tax.

So, is it "wrong" to be employed by one's partner if one is in fact doing all the business's secretarial work including preparing financial information for the accountant?

no, it's not wrong - the partner/wife should be registered as employed and do PAYE, and the employer should also be registered as an employer, and have to pay NI contributions.
I think you don't have to pay your spouse, but if you do you declare it like a normal employee.
I think.
correct me if i'm wrong, though, please.

from hmrc

and from tax assist

and from money to the masses

Oh God we now belong to two suppsoedly samming groups- low incomer And self employed!

Yikes!

We earn very little, business in start up stages. Don;t assume, perhaps....

BUT absolutely tax evaders are criminals.

Oh, that's OK then. Our super-efficient accountant sorts out all our PAYE/NI stuff, I literally do day-to-day admin and just make sure she has all the trillions of receipts, invoices etc she needs. It really isn't easy to cheat on taxes, they check everything and our accountant questions everything - dh is far too scared of her to try anything on!

Free school meals? I'm SE as a childminder, don't earn a great deal and dh is unemployed. We are really struggling financially but we can't get free school meals. Dh gets free prescriptions but I don't. I'd love to know more about these free school meals!

You cannot claim free school meals unless you claim IS or JSA; tax credits at amx rate (which is what you get if employed including self and making a loss) do not waulify you for them.

If someone you know DD is getting that then tehre's fraud involved; I can happily link croiteria if you want?

looks like most people hold the same viewpoint :D A big reason why builder's ask to be paid in cash is so they don't register for VAT. If they did, their fee would be higher, and thus they'd lose business.

I'm also self employed, it's a bit of a nightmare to do the tax return but as nearly everything I do is for work, it tends to work out nicely!

KateF - it is incredibly easy for someone to say they are self -employed and not pay the tax they should. Incredibly easy.

I run my own business and I only pay myself just over minimum wage. Yes the company effectively pays for running my car (as would your employer if you had to claim mileage at HMRC 40p per mile rate for the number of business miles I clock up)

Yes the fancy mobile phone and laptop are paid for - I couldn't run my company without them. Yes I could take dividends out (and pay tax on them) and not pay quite as much tax as you do on your PAYE earnings. (I plough my profits straight back into updating my equipment, training, building the business)

But, if you want to risk your life savings on starting a business, work 16 hours a day, never switch off, work weekends, evenings, during holidays, employ other people, pay their NI and tax, holiday pay, sick pay (and maternity if necessary) then you too would be entitled to do the same.

Do you have paid holiday, sick leave entitlement, maternity leave and pay? Can you take time off? Can you switch off from your job when you go home?

I provide employment, collect VAT on behalf of HMRC, pay rent on premises in a rural area, provide a useful service to my clients.

If you take the PAYE, employed route you take no risk. I'm taking huge risk accompanied by huge stress so you can f* off with your jealousy.

Oneopod - many contractors claim false self employment in the construction industry and have no more risk than an employed comparator, they just pay less tax, and get away with it because of the shortage of inspectors, and the failure of the IR35.

DH is a SE carpenter and tends to do specialised work for heritage sites. He has to be VAT registered amongst other things to get the contracts. However, he is often asked to quote for domestic work and because he is VAT registered includes this in the price. The amount of people who want him to take the VAT off for cash is staggering - he never accepts this as he's worried he may asked to account for gaps in income. His accountant hasn't told him of any loopholes and the only benefits we get are CB and CTC of about £39 per month.

I don't doubt that there are many falsely declared self-employed contractors, particularly in the construction industry (but there is a special Construction Industry scheme which they have to be signed up to to be able to claim self-employment).

It's just the attitude that if you run a car, phone and laptop at the expense of the business, hence it is a tax-efficient purchase, people like the OP get all huffy (jealous?)

But they fail to see how much more a successful small business will be paying in tax (not necessarily in income tax, but corporation tax, VAT, employers NI, etc) than someone earning £20K on PAYE.

And an employed person will (depending on job of course) have the use of a phone, possibly car, computer, etc - all of which their company is getting as a tax-free expense...
If your employer asked you to buy your own phone or desktop computer to use at work - you'd be pretty pissed off if it had to come out of taxed earnings wouldn't you?

PutTheKettleON: if your neighbour is claiming and not declaring the dividends then it is a fraudulent claim.

OP - just because you have met one person who is taking the piss (possbily) then don't assume we all are.

We've been asked several times to provide false invoices for grant purposes (entertainments industry, people egts arts funding for our products).

We enver do, never would either: pay every penny we owe.

And no you can't employ your domestic gardener or cleaner directly through your company, but when every hour you work for yourself is billable to a client it doesn't make sense to go home and spend 3 hours cleaning the house once a week when you can pay someone a fraction of your own hourly rate to do it for you....

Basic maths ,people.

Actually I do wonder if we have a big sign saying kick us sometimes

Becuase DH mails stuff and sells via ebay quite ofrten, the post office bloke ahd a massive go at him about avoiding taxes and putting decent tax paying people out of work.

Dh is a decent tax paying person.

Then I come on here and we get argh benefits / disability etc

Ats chool it's that damned asd kid

DO I need to tax register as a punch bag or is that only if I get paid for my services?

Fizzle, you are right there are many issues in the construction industry in particular. However, Recognising this HMRC bought in the CIS scheme which deducts 20% tax at source from all sub-contractors (that's those pesky self-employed plumbers you are talking about) they don't really fall foul of IR35 as generally in that industry they do move from site to site and employer to employer.

Trust me I operate as a main contractor under CIS and they (HMRC) are hot hot hot on this. There is and always has been a cash economy in this and every other country, it is slowly being squeezed out of us. The cash economy is generally where the tax evasion takes place and is normally Jo Public wanting a 'deal for cash'. I too am frequently asked for a cash discount but I just wont do it.

YANBU to dislike tax evasion but really do get your facts straight about which particular tax they are avoiding and if you really do think that they are running your nose in it then report them.

Oenopod has missed the point of the OP entirely. And its nothing to do with jealousy. No one has attacked SE people. Most SE work jolly hard and are honourable. That was never the issue.

You can put a cleaner through the business if you have an office where you see clients etc.

And if you work from home as I do, you can claim part of your domestic bills - utilities, phone, council tax, I believe.

I just send the accountant all our bills and let him sort it out.

I agree with Sarthrell, people are saying stuff here that just isn't true. God, the number of calculations i've done over the years, CIS etc. We all know the tax system, HMCE, IR35, CIS etc etc has failings, but lets not bash it all altogether.