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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

HMRC are going to tax agency workers back 20 years

141 replies

Pirie · 25/09/2018 23:26

So it appears many of us working through agencies are going to get life changing bills from the revenue:

How can this be real. Anyone had a brown envelope about this yet?

OP posts:
AjasLipstick · 25/09/2018 23:29

It's for people who used a disguised remuneration scheme from 6th April 1999.

Did you? This is to recoup money from people who avoided paying taxes by fraudulently taking payment for work as payment in form of a loan or similar.

m0therofdragons · 25/09/2018 23:29

I can't get the sound to work. Are agency workers expected to pay more tax than everyone else or just pay what they owe that they previously didn't declare?

Pirie · 25/09/2018 23:35

I’m not sure about this. Did you guys use agencies in the health care industry. It has been a worry since I heard about it. Not sure if it even affects me. How would I find out as I don’t think agencies use a few years ago still exist

OP posts:
shinycat · 25/09/2018 23:48

OMG that's terrifying. Shock

I really feel for anyone caught up in this. Surely it has to be down to the employers?! (Not the individual employees...?(

AjasLipstick · 25/09/2018 23:57

Yes, it must be down to the employers...or are agency healthcare workers meant to pay their own tax?

Walkingdeadfangirl · 26/09/2018 00:20

If people have been avoiding paying tax they should then it is totally fair to ask them to pay it back. And this sounds like people avoiding paying tax which was due.

"My accountant/agency/off-shore bank said it was ok", is NO excuse.

AnalUnicorn · 26/09/2018 05:27

Have you paid your fair share of PAYE over the years, or did you join a contrived scheme to avoid income tax payments, eg through loans, investments in film-making or the like ?

If the former then you likely have nothing to fear. If the latter, well then expect to be billed for what you owe plus interest and maybe a penalty.

Raver84 · 26/09/2018 06:07

There is a bbc moneybox podcast from a few days ago which explains this fully and actually if you have avoided tax then yes you need to repay it. Have a look at the moeny box podcasts on bbc website.

Digestive28 · 26/09/2018 06:17

Having dealt with HMRC over something I’m not convinced they have the staff or organisational skills to do this. Makes sense if you’ve avoided tax to pay it, would be good if they also did it to amazon, Apple etc

Notacluewhatthisis · 26/09/2018 06:17

Essentially it comes down to.....If you avoided paying tax, you have to pay it.

How is that unfair?

abbsisspartacus · 26/09/2018 06:22

Umm Starbucks amazon massive corporations that avoided billions but let's all focus on individuals over the past 20 years that probably owe pennies in comparison

BrisaOtonal · 26/09/2018 06:26

^^ spot on abbsiss

Notacluewhatthisis · 26/09/2018 06:34

We should be sorting it all.

Logistria · 26/09/2018 06:58

Evasion is illegal, not avoidance. Using an ISA is an act of tax avoidance. HMRC can and do overturn abusive schemes marketed as "legitimate avoidance". Abusive in terms of trying to abuse the law.

Ergo, they're currently pursuing users of abusive arrangements that have been through the court process and held not to be legal.

They can only go back 20 years in cases where you have done something to deliberately underpay your tax. Like accepting a pretend "tax free" loan - that there was never any intention to repay and was then written off - instead of taxed salary.

Most agency workers are on a payroll and pay their correct taxes through PAYE. If that's you, then there's nothing to panic about.

There is work ongoing to address profit shifting by multinationals. When laws exist to tackle it they will go after anyone breaching those too. In the meantime they can only pursue people who have broken actual laws, not just done things we dislike.

Awwlookatmybabyspider · 26/09/2018 07:01

That's it Abbs. Starbucks and Amazon have been conveniently forgotton about.
They can't fight the big boys,you see.
Therefore they're going to for Peggy across the road.

BarbaraofSevillle · 26/09/2018 07:12

DP may be affected by this, but I don't expect him to owe a lot of money, if any, but it could be some.

He occasionally does agency work in the construction industry - machine driver. Sometimes he was paid under the Construction Industry Scheme, sometimes he was paid by an umbrella company.

He didn't have any choice in this, if you wanted to work, you had to go by their rules. I suspect that the agencies and the umbrella companies were all connected and I think similar things went on in supply teaching and probably NHS bank staff. It worked like this:

The agency would place him on a site and he was supposed to be paid say £14 an hour to drive the machine, but they required him to sign up to a specific umbrella company. They also told him to submit an expenses claim for mileage and lunch each day, even though the jobs were generally local.

When he was paid, they would pay him NMW for the hours he worked, add on his expenses, an allowance for holiday pay and a random bonus and pay an amount that was more than what he would earn on NMW but less than if he was paid the £14 an hour that he was supposed to be, and supply a pay slip that was made up of NMW, expenses, a random bonus and made no sense at all (I generally understand these things and gave up trying - I helped DP do his tax return for his mix of employed/self employed and umbrella work and I basically crossed my fingers when I pressed submit).

The umbrella company would obviously make quite a bit out of it, but less tax would be paid by DP had he been on a straight PAYE £14 an hour job, but as I said above, if he wanted to work, he had to follow the system and he was also losing out here, even though on paper he might have paid less tax than he was suppposed to.

The construction unions were trying to fight the system and this explains the problem.

He hasn't done much of this sort of work over the last couple of years and when he has, it's been on the Construction Industry Scheme, which treats him as self employed for tax purposes, takes some tax off and it all comes out in the wash when he does his tax return.

As well as being a huge tax scam, the aim of the exercise has been to take away job security from people working in the construction industry, basically a huge amount of builders and other workers on construction sites are on this system and they go from job to job and while they should always be able to get work, they have no job security and it's the agencies that make all the money because the construction companies don't employ people directly.

redsummershoes · 26/09/2018 07:14

the big corporation didn't brake the law. they pay less tax through (at the moment) legal schemes.

this 'loan instead of salary' scheme is very wrong on many levels.

Oblomov18 · 26/09/2018 07:21

What a mess.
Agree with pp, because they can't get Amazon and Starbucks, they go for Peggy down the road.

BarbaraofSevillle · 26/09/2018 07:28

Right, I've now seen it is to do with the loan system, which wasn't in construction as far as I can see (I didn't watch the video WTF is that all about, why does information have to be presented as videos these days, stuff like this, I want to read it, and can usually do it faster than it takes to load up and play anyway).

But I'm fully expecting HMRC to look into what the umbrella companies were up to at some point, as for a while, that was how the construction industry ran, as well as lots of other industries where agencies were widespread, but whether umbrellas or loans, in most cases, the workers did not want to avoid tax and wouldn't actually have benefitted from such a system, as outlined above, they would probably have received less money than they should have done, with a variety of middle men taking a big cut.

Link about the loan thing, for other old fogies like me who prefer to read words.

www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans

NotTheMrMenAgain · 26/09/2018 07:32

It's so annoying when people wheel out the "they can't get Amazon and Starbucks so...." line. It also shows lack of understanding by the people saying it.

HMRC CAN'T 'go after ' Amazon et al because the way they've structured their tax arrangements ISN'T illegal. When laws are changed to make it illegal then HMRC will be able to take action.

redsummershoes · 26/09/2018 07:35

I totally agree that hmrc should come after the companies who forced their workers into such schemes as well - maybe they do?

Nenic · 26/09/2018 07:37

About 80% of big businesses avoid tax. AkzoNobel who own Dulux, Cuprinol etc set it up a few years back but it’s always Amazon and Starbucks that get mentioned. Loads of them do it

IABURQO · 26/09/2018 07:38

@BarbaraofSevillle - you haven't described him as taking a loan for payment instead of PAYE salary or a dividend. This action as I understand out is if someone took a loan that was not repaid and later written off. If my accountants had suggested something like that then I'd have switched accountant, it's so clearly tax avoidance.

Being forced into self-employment is shit, but usually you can pick whatever umbrella company you like or set up a limited company provided you also set up adequate PI insurance; if your husband isn't happy that they are working in his interests then he should be able to switch.

PiperPublickOccurrences · 26/09/2018 07:40

Total lack of understanding here.

This is not about Brian who works through Adecco as a warehouse temp worker, Sandra who's an office temp with Office Angels or Kevin who does shifts with a care home agency.

It's about people who have actively signed up to a tax avoidance scheme and weren't on PAYE in the first place.

www.telegraph.co.uk/tax/news/thousands-used-rangers-style-tax-avoidance-schemes-set-miss/

Rangers FC were up to this - they set their players and execs up as companies rather than employees or self-employed contractors and instead of paying them a salary, offered them loans for the same amount. No tax due on a loan as it's not earnings. Loans never needed to be paid back. But now HMRC have closed the loophole and quite rightly are asking for back payments of the tax.

It's not as if the tax man is going through everyone's payslips to see who has been working with an employment agency and sending them a bill. If you've been part of this scheme, you'd know about it.

Oblomov18 · 26/09/2018 07:40

MrMen, it's not a lack of understanding. Thank you. I know it's not illegal. I am aware.
But there are things that can be done. By Government, by HMRC that aren't.

I do have experience of dealing with agencies, and sometimes it's frightening the mistakes, the lack of staff, the lack of knowledge.

But I still maintain that, in fact in most/many areas of life, chasing the little man, Peggy down the road, is done, because it's an easier option.