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Where Taxpayers and Advisers Meet

Fined by HMRC - help!

Joined:Mon Jan 21, 2019 12:26 pm
Fined by HMRC - help!

Postby G M » Mon Jan 21, 2019 12:28 pm

Apologies for the length of this post, I'm really worried about this and have written it as concisely as possible, thank you so much in advance for taking the time to read this...

In the tax year 2014/15, whilst I was between full-time roles after being made redundant from my graduate job, I undertook two short-term freelance contracts. In the first was I was employed on the company’s payroll and worked part-time during March 2014.

The second role was with another PR agency and I instructed an umbrella company, Accessa, to manage my tax and National Insurance contributions on the recommendation of the recruitment agency I had secured the work through. I worked for the PR agency from the 1st April 2014 to 1st May 2014 and my invoices were logged via Accessa, who then sent them out to the client on my behalf. I received payment from the umbrella company – named on my bank statements as Endeavour Global – directly and was assured that all tax contributions were arranged on my behalf as a PAYE contractor of Accessa. I have been informed numerous times that this is a very common arrangement for freelance contractors and it is completely legal. To this day, it is still a valid route for freelance staff and contractors recommended by many recruiters.

I became self-employed in October 2017, when I left my full time job and undertook a rolling assignment to provide services to another PR company and I registered as self-employed in January 2018 for the first time.

I was alarmed to discover, upon calling to confirm that they had received my application for self-assessment, that HMRC had erroneously marked me down as self-employed from the year 2014/15 without my knowledge, when I was, including the small freelance stint, technically in full-time employment, with no other income. They told me that they believed I had received untaxed income during the 2014/15 tax year, which I have refuted with them numerous times and have sent them evidence to support.

As a result, I was told there were a number of accumulating fees and penalties on my account, which to date, has now reached almost £5,000. According to HMRC, I had not filed tax returns each year since 2014/15, when the problem began and they continue to send me letters detailing the incredible amount of money they believe is owed to them for these outstanding tax returns when I wasn't even self-employed.

HMRC, however, has never previously written, called or emailed me to request a tax return for any of the years they are penalising me for. I requested details of where these requests were sent, and they refused to confirm the addresses they supposedly sent these letters to. I was still receiving my P60s and P45s as usual during this time, whilst I was in full time employment, completely none the wiser as I continued to progress in my career. HMRC would have had my current details and have acknowledged tax paid via PAYE during these years, yet they did not contact me to request any self-assessment tax returns. If HMRC sent any letters to the two rented flat shares I have lived in in London as a young professional over the last four years, then I provided forwarding addresses to my previous landlords, to ensure important correspondence was not missed. A letter from HMRC is not something I would have ignored.

Since I was not self-employed until October 2017, I was not a candidate for submitting a self-assessment tax return according to HMRC’s website and the first one I expected to prepare is for the 2017/18 tax year, which I have just done.

I have instructed an accountant, who has been in contact with HMRC on my behalf. He explained that my inclusion in the self-assessment process in 2014/15 was probably a mistake. He contended that the penalties and fines incurred should be set aside if I did not fit the criteria to be in self-assessment. He wrote to them setting out my income sources from 6 April 2014 and we have now submitted my tax returns for the 2014/15 and 2015/16 tax years.

I was told that once I had submitted these outstanding tax returns that I could then appeal the penalties. The argument being that I did not qualify for self-assessment until October 2017.

Now that they have my 2014/15 return, in the past week I received a letter from HMRC to inform me that they are upholding the fines and I have 30 days to come back with an appeal. They have called my agreement with the umbrella company Accessa / Endeavour Global a "tax avoidance" scheme. They have calculated an extra £210.60 I owe from 2014/15, which I have asked my accountant to look at as he did not calculate this when he did my return. I have already paid around £150 that he had calculated for that return. I have absolutely no problem paying tax I owe, but I feel I am being unfairly penalised when I earned no more than £400 a week for the month I was in-between jobs and everyone I spoke to recommended the umbrella company as completely above board.

I feel completely helpless with the threat of nearly £5,000 debt over my head. This could financially cripple me for the rest of my life and HMRC has said in the letter I will be listed as a 'high risk taxpayer'. Is there any way I can win an appeal, and if so what would be the best course of action for me to take? Thank you very much for taking the time to read this.

Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Fined by HMRC - help!

Postby pawncob » Wed Jan 23, 2019 7:33 pm

Pass everything to your accountant. If he knows what he's doing, he can sort this with an appeal and a challenge to HMRC's stance.
With a pinch of salt take what I say, but don't exceed your RDA

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