to be considering reporting someone for tax avoidance

[chloesbaby]

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.
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?

oh i love when someone wants to report someone , with limited info and no hard evidence. but hey ho. no harm done. errr no. look at alouise's post and take on board the trauma of it all.
i've dealt with lots of companies, fraud, self assessment problems over the years. never easy situation. always stressful.

people want to report to social services OP for child abuse. on heresay and spurious grounds. but hey, don't worry. 'no harm done'.

errr no. harm is done. have a good think about what you are actually saying here.

I was going to say what alouiseg said - I know someone who was investigated and it was horrible and went on for 2 years - wouldn't wish that on my worst enemy.

An investigation will cost the taxman a fortune (just think how much accountants charge!) and probably yield very little. If her husband has a good job, they can probably show the tax man they can support their lifestyle on his money. If she's paid in cash and spends it in upmarket clothing shops, it's going to be hard for the tax man to prove anything. Hardly think taxman will go rifling through her wardrobe, looking for designer labels.

I know it's not nice that someon may be cheating the system but I would keep well away.

Sorry tax evasion is tax evasion and I don't buy the argument that it's not worth investigating the so called smaller instances (treating your nanny self employed, non vat registered builders etc) . If you add up the lost taxes in black economy it's a big hole and if you start sending the message that small time (so called) evasion is ok it's a slippery slope. I take point That may be cost inefficient in some instances but what about those instances where it does pay.

Hang on, the news is full of dire warnings about desperate times for public spending, steep tax rises and severe cuts in services... there are threads full of people saying people who work for the state, the disabled, benefits claimants and everyone else who is not well off is going to have to suffer.

Why should this woman - if the allegations are true - profit while honest people suffer? Why isn't there a publicity campaign akin to the 'dob in a benefits fraudster' hotline?

Everyone who is self-employed has to register with HMRC is my understanding here
Regarding ebay - I guess it depends on the definition of "trader" and whether selling your old clothes/books/bits and pieces constitutes being self-employed. I can't see how it would, whereas buying and selling for profit would constitute trading I think, but not an expert.

Well said edam- there was a phoneline you could report suspicions about at one time but not sure it's still going.

It just doesn't sound credible to me though - I suspect the friends have both done a lot of embellishing.

Personally I would only report something I knew for sure - not just hearsay.

Mind your own business esp as she has kids.If you must do something write to her and let her have a chance to put it right although how you prove the hearsay is another matter.i agree though 600 a week for tutoring is v high and unlikely tbh

I agree with what you say poppy34 and edam but I really think it would be a waste of public money in this case. To earn £30k as a tutor (at £25) an hour someone would have to be working 6 hours a day 52 weeks a year. Unlikely I think.

If it's less than that say £15-£20k, by the time you take out expenses and your personal tax allowance, there would be very little tax to pay. I'm not condoning cheating the taxman but wouldn't think it would be a worthwhile use of resources.

Ok I'm self emplyed so have a little self interest here. We don't get holiday and sick pay etc so if you don't work you don't get paid.

If she is committing tax evasion (and as others have pointed out, that's a big Chinese whisper style if) it's not particularly fair behaviour on her part, but it would be morally far worse for you to report her anonymously. If you really have a problem with what she is doing, tell the tax office and tell her that you are doing so - admit to your actions. Or warn her that you are going to do so first. If you were really brave you would be upfront and ask her if this rumour is true, and if she admits it tell her you think she should start paying tax from now on.

But grassing people up is despicable and cowardly, unless you have concrete proof of child abuse/neglect. I've read a fair bit (and spoken to victims) about the damage done by anonymous snitches in dictatorships, where it has led to people going to prison for a long time or even being killed. That's not the case in the UK, luckily enough, but the sentiment behind being an anonymous informer is the same.

I'm talking about individuals informing on other individuals, by the way. Whistleblowing on large company improprieties is a bit different.

Why is it different, though, BlauerEngel? Individuals are allowed to defraud the taxman but companies aren't? I don't really get your logic...

I didn't say she was allowed to defraud the taxman, I said the OP should not inform on her anonymously.

My feeling is something to do with the motivation for informing - when you inform on a person it feels very petty and vindictive and cowardly, and to be honest in most cases the person doing the informing could do something about it directly by talking to the person whose behaviour they object to. You see, mostly they don't want to change the behaviour, they just want to get the other person into trouble. My experience of informers in the former East Germany, having spoken to a lot of people who suffered from it, was that it was often motivated by something other than what the informers claimed - petty jealousy usually.

Companies are not individuals and should be held publicly accountable, especially if they trade publicly on the stock market. I'm a partner in a small company and we have to have incredibly transparent paperwork to show the tax people, but I think that's OK. Whistleblowing on a company, if you are convinced the company will not change its behaviour through internal processes, is not directed personally against one person. That's the difference.

How do you really know this? I do not believe you should report her unless you have a very good reason.

Blauer, it's only petty and vindictive to inform on a person (anonymously or not) if you are doing it for some other reason - like, you don't like them, or you're jealous of them.

In this case the OP's only reason for considering informing is because she thinks what the other woman is doing is wrong.

That's not vindictive at all.

Well said BlaurEngel - I am not comfortable with the reasoning behind the OP and her desire to inform the Tax Dept.

I'm self employed too btw. Fill in my tax return and stump up the cash twice a year. When I went freelance, the tax man sent me on a one day course all about running your business and the nice man promised me they applied a test of 'reasonableness' - so (he claimed) your paperwork doesn't have to be perfect, but in reasonable order.

minipie - so if she thinks it is wrong she should tell the other woman so. Give her a chance to either explain what's going on (eg, the intermediary friend is talking bollocks) or to turn herself in from now on.

People in the Nazi era and East Germany also informed because they claimed they thought it was 'wrong' what others were doing. As I said, they were motivated by wanting to get others into trouble rather than rectifying the situation. When we're talking about tax rather than a crime against the person, the OP should clearly give the friend of friend a chance to do something herself, at the very least to defend herself against what might be evil baseless rumours.

Yup edam I'm self-employed too. I pay what subjectively seems to be oodles of tax, and what seems to be even more to my tax adviser. But I would rather live in a society where there is a small degree of tax evasion by individuals than in one where people thinks it's OK to grass on the basis of rumours.

Tax evasion is a crime and it's a crime the rest of us have to pay for.

I don't like sneaks, either, as a general rule. But if you steal money from everyone else, you run the risk that someone will tell on you.

Personally I'd be less inclined to report benefit fraud as I understand often benefits are stopped during an investigation, leaving people penniless (and may be incredibly harsh on any children in the household). While in this case, one parent is earning a decent income.

That's IF the rumours are true, of course. Big if, especially as it seems unlikely a tutor is working as much as gossip would suggest.

I don't think you can quite compare reporting potential tax evasion and East German informants (you're talking about the "democratic republic" I assume, rather than the holocaust events). HMRC does have the obligation to make sure their accusations are grounded in truth. And they hardly ever imprison anyone, and definitely not someone with taxable income of £30k over four years. Basically, the amount of undeclared income doesn't even matter - if she's self-employed then she needs to be registered (and most likely paying NI), otherwise she's defrauding HMRC.

Thing is we do live in a society where plenty of people think it's a good thing to report those suspected of overclaiming benefits. With high profile government encouragement. Same should apply to tax evasion - the well-off should have to put up with the same rules as the poor.

No idea what I'd do personally if I suspected someone of tax evasion or benefits fraud, mind. The reluctance to sneak and worries about what your actual motivation is would probably leave me not doing anything at all.

but the op has found on from a friend - so it will be a friend telling a friend who will inform the tax dept on her friend?????

A friend told you? So actually you have no idea do you? Stop gossiping, it is yuck.

Blauer

"minipie - so if she thinks it is wrong she should tell the other woman so. Give her a chance to either explain what's going on (eg, the intermediary friend is talking bollocks) or to turn herself in from now on."

Agree - my earlier post suggested giving her an opportunity to turn herself in/start paying tax.

I pretty much agree with Edam here.

If, as a puble sector worker I get a 5% pay cut next Tuesday and lose child benefit and tax credits then I'll dob her in myself.