They won’t pay me my wages until end of March

[Sparklydiplodocus]

I’ve been freelancing for a company for over a year. After April they wanted me to do a self-declaration for tax, however when I consulted HMRC they said I should be on their payroll as a freelancer and the historic tax/ NI back to April should be paid by the company as they fucked up.

So the company got me to fill the relevant forms in and I started working for them again as of 3 weeks ago. I got an email this morning saying that due to them working out putting me on payroll I won’t be paid until the end of March! AIBU to think this is really unreasonable?!

They also think I should be paying the historic tax and NI and are taking it all out of my wages in March! That’s not what the tax man said!

I don’t know what to do and I’m fuming.

you can only be a freelancer if you also work for other organisations

This, and quite a lot of other stuff on here is wrong.

Freelancer covers a variety of possible situations and it's important to note that the positions in relation to taxation (including NI) and employment rights are separate due to the shit way things are done in the UK.

Freelancers can be -

Self employed (sole trader)
A director of a limited Company
A partner in a limited liability partnership
A no-rights employee (contractor working inside IR35)

All of these have different setups and taxation rules.

Although the Gov website mentions having more than one client as a guide to whether one is self employed that isn't in itself a determinant as has been found in many cases at Tax tribunal and courts.

OP (and the employing organisation) seem very unclear about which of these is actually happening.

It is possible to be "on payroll as freelance" - that's the inside IR35 version where you don't get any employment rights but do pay the same taxes as a PAYE worker.

Sorry OP cross posted with your explanation.
In that case, my understanding is the company should pay your outstanding back tax etc as they wrongly classified you as a sole trader.

I'm not an expert but are you sure HMRC didn't mean that the company will need to pay their share of the backlog (which will be much bigger than your share) rather than they pay your share as well as theirs?

I'd suspect personally that you haven't paid any tax on this money and therefore will need to backpay that depending on how much you expect been paid over the tax year.

The company will also need to pay their share of course.

I feel for the company, as it seems they thought they were taking on a freelancer presumably for the simplicity that provides them but you were actually entirely clueless and not in any way shape or form an actual freelancer

Now they have to rectify a mess that they didn't want

Seeing as it's happened though, they should follow any necessary rules to get you your money for work done.

Call ACAS - if you are now an employee then you should be getting a contract and a pension etc as well as your pay

You have been unbelievably naive "freelancing" without considering tax implications. Everyone knows you have to register as s/e if you are not working as an employee. Were you just not going to pay tax?

You can either suck it up or pay an accountant to get you sorted. Depending on the amounts you can decide which option is the best one.

Some of the info on this thread is right, there isn't a clear answer which can be gained without understanding the full details behind your employment which you understandably haven't provided.

The hmrc tool isn't always correct and there is a grey area where you can still overrule it with appriate evidence.

To be candid, unfortunately given the general grasp of the situation and the rules behind it - you either need to do some proper research to understand the options and associated liability, or you should just pay a tax advisor for an independent view for you. This doesn't need to be incredibly expensive, a local qualified person can probably sort this out for you in a couple of hours if you have all the details to hand.

What did you tell HMRC? Because it doesnt sound like you are an employee.

You work for other people. You notice do 10 hours a week. And you invoice them each month for your hours.

Right, when you went freelance you needed to register as a sole trader.
You need to invoice the places you do work for each month,.showing hours you did, your rate, total amount and your bank details. Then you get paid.

You need to set aside enough each month to cover your tax liability. You may also need insurance depending on what it is you actually do (is it likely that you couple be sued for anything you've provided if it does very wrong).

Each year, you need to fill out a self assessment and pay your tax. You dont pay it with each wage. You do a self assessment as a sole trader.

You cant just start working freelance and then never own tax.

What did you actually tell HMRC? Because it sounds as though you are a freelancer.

You've been paid your fee. Your tax should come out of that. You sound like you have no idea what you are doing. Being self employed comes with responsibilities. Did you never think about that?

Also, if this is ir35 related - the company could decide to make a determination that based on their understanding of the situation, this role is outside of ir35 - you could stick with the freelance set up and pay your tax via self assessment route

This will of course be their decision based on a risk assessment etc but might be easier than having to make you an employee for 10 hours a week

As someone else said, if they expect you to back date the tax, it is worth asking about backdating of benefits (eg holiday) as whilst you should have been more aware of the rules here, it is the employer who is at fault for paying you in a manner which isn't compliant or appropriate for the type of role

You are responsible for paying your own income tax whether self employed or not. A company does not pay it. You may be confusing PAYE where the company deducts the tax at source and pays it to HMRC on your behalf, but it always comes from employee income.

Don't forget as an employee they will need to pay holiday and sick pay too.

@Itsalmostanaccessory I had training re IR35 recently and HMRC has really, really tightened up on what is classified as S/E. The level of evidence a company has to provide to "prove" someone is a contractor and not an employee is very high. Working somewhere else for 10 hours a week won't cut it.

Why are people so brutal on here?! Calling me clueless- I went along with what they told me to do and it’s wrong as it turned out.
And obviously I never expected to not pay tax! For gods sake.
People are so nasty from behind a keyboard and they’d never say that stuff to someone’s face.

@LukeSkywalkerNooooooooo

Why are people so brutal on here?! Calling me clueless- I went along with what they told me to do and it’s wrong as it turned out. And obviously I never expected to not pay tax! For gods sake. People are so nasty from behind a keyboard and they’d never say that stuff to someone’s face.

I'd absolutely say everything I've typed to your face if you hadn't already registered as s/e when you started "freelancing" when were you going to do it? "I just did what I was told to do" doesn't cut it on business.

I appreciate you are feeling defensive and bruised and frustrated rn, but the way to fix it is get stuck in to the solutions. Look forward, not back. What's done is done and no one on this site can wave a magic wand and tell you that you were right all along.

Sorry you're struggling with all of this.

Ultimately, you're responsible for your own tax affairs though - why would they tell you what to do?

It's a lesson learned and you'll know for next time.

Good luck!

I don't understand why you're being so defensive. You're only being asked to pay tax which you owe. If you believed you were self employed you should have been putting that aside anyway to pay your tax bill at the end of January (and should have made an advance payment in July). So if they take the tax and NI from you in March you should have some money which you put aside which you will not need to use.

The issue about not being paid until end of March seems unfair if you have been working since mid Jan (you said you had been back for 3 weeks). They should be able to put you on their Feb payroll using an emergency tax code, unless their payroll cut off date is very early and has passed.

Also, have you changed username?

Why are you getting so angry?

You see yourself up as a freelancer. You started taking jobs as a freelancer and invoicing people for your time.
But at no point did you actually sort out the business side of it.

What did you think would happen? When did you think you would pay tax?

You're being paid by more than one company. You need to report all those earnings and pay your tax if you owe any.

Register as a sole trader. Fill out a tax return when it is due.

@UnexpectedItemInShaggingArea

She works about 10 hours for this company and 10 hours for the other.
So, is she employed by both? Freelancing for both? Or half and half?
What if she takes on more clients?

I know HMRC are getting tight and really want most people classes as employed in these situations, but there are times when it just isnt practical for that. If OP is freelancing and plans to grow that into more freelancing then she needs to register as a sole trader.

[quote Itsalmostanaccessory]@UnexpectedItemInShaggingArea

She works about 10 hours for this company and 10 hours for the other.
So, is she employed by both? Freelancing for both? Or half and half?
What if she takes on more clients?

I know HMRC are getting tight and really want most people classes as employed in these situations, but there are times when it just isnt practical for that. If OP is freelancing and plans to grow that into more freelancing then she needs to register as a sole trader.[/quote]

I am assuming she is an employee of the first company but I don't know, OP has not explicitly said. Nevertheless each company needs to carry out their own IR35 checks. I've been through this recently and it's pretty onerous because HMRC is fed up of employers dodging responsibilities through hiring "freelancers" when they should be employing people properly.

If you should have been on the payroll, since say, April 2021 and they are now retrospectively putting you on the payroll now for Feb (well, March, by the sounds of it) then it sounds like they are working out what you should have got every month since April 2021,say, and paying the PAYE & tax over to HMRC.

Have they said how they are calculating your pay? Are they working it so that the (monthly?) invoices they must have paid you is now your net pay?

I'd try and get some advice on this, they should have asked for this info and make a professional decision as to whether IR35 applied or not before you started. It's them that gets the hefty fine if found to be in breach of it, they're chancing their arm by the sound of it- I'd try and get some clarification on what you can do.