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Where Taxpayers and Advisers Meet

Loan Charge & Fine from HMRC

Joined:Mon Jan 21, 2019 12:26 pm
Loan Charge & Fine from HMRC

Postby G M » Mon Jan 21, 2019 2:20 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.

tariq mukadam
Joined:Wed Jul 24, 2019 3:54 pm

Re: Loan Charge & Fine from HMRC

Postby tariq mukadam » Mon Jul 29, 2019 3:54 pm

I too, have been with Accessa for the period Dec 2013- September 2014
I received a similar letter by HMRC back in 2016 asking me to file a tax return.

HMRC latest letter has offered to settle on net basis but this is still around the £3000 figure mark.

similar to GM's input below, I was employed as employee through an umbrella company, and was receiving my payslips/p 60s and when i left to become a permanent staff for the company i was working for as a contractor I received my p45.
I was told to file self assessment ta return as they which i also did for that period.

I got in touch with HMRC , saying that they should be chasing up the employer ( i.e accessa and Enddeavour ) to recoupe the money. I was working and paying my taxes as per normal and I was none the wiser in terms of how Accessa or Endeavour

An umbrella company is a business that acts as a third party between a contractor and an employee.
The contractor outsources its payroll functions to the umbrella company, which handles the pay of the employee and makes any necessary tax deductions. this is clearly stated in the contract I signed with Endeavour.

I contacted accessa last year when HMRC sent me another letter asking that i settle and pay the amount owed.
I contacted accessa at the time asking that they should be bearing the cost and not me.

On the phone director of accessa has said that they have not dealt in any tax avoidance scheme but will not come forward in terms of how to resolve or help.

Accessa has suggested not to settle with HMRC but that is it.

Extract from email from accessa umbrella

"Thank you for your letter dated {Date}.

Whilst I am aware that HMRC have taken action against so called “Contractor Loan Schemes” I did not participate in any such sort of "Contractor Loan Scheme" during my employment with Endeavour Global Consulting Ltd.

I can confirm that no third party provided me with a Loan during my employment with Endeavour Global Consulting Ltd.

That being the case, I have not requested a settlement figure as I have not been involved in a “Contractor Loan Scheme” and I don't believe that there is a formal legal dispute or that any enquiry into Tax Returns or that litigation exists in regards to Endeavour Global Consulting Ltd.

If this is incorrect then please do provide me with details of any litigation against the Company.

I am still unsure of what to do, as I have received another letter from HMRC dated June 2019.

firstly apologising for delay in responding to my letter that I sent back in May 2018

the letter states that according to HMRC , Endeavour operated a tax avoidance scheme where a small amount of renumeration was received and not notified HMRC .
they also state that I was unlikely to have been told by Endeavour that this was the type of scheme they operated.
HMRC then states for this reason will not be charging me with any penalties and only asking that I pay the tax due on the untaxed income and the interest for this tax.

Following this latest letter from HMRC i have contacted accessa again asking that they respond, as I still see both Accessa and Endeavour to be responsible. and therfore they are the ones how should be paying the renumeration figure to HMRC as they are the ones who cheated the system.

Accessa has written an email to me after my phone call to them , asking they they provide me with answers
see extract of email below

"Regarding payments from Endeavour ( my employer):
I received a salary
I received a distribution from the company (my employer) as an employee shareholder
That is an employment related security
I did not receive a loan from a third party for the purposes of avoiding tax
I did utilise a cash flow facility made available to employees
an interest rate was applied to the payments to me made using this facility
the facility was substantially paid down by the distribution made to me ( as an employee shareholder)

i do read up on elements of employee incentivisation and the HM Government's approval of these arrangements, that is between employer and employee, and i dont quite understand your liberal use of the word " scheme"
HM Government encourage employers to improve productivity by offering employees the chance to participate. Participate is not "scheming"
there was no scheme, no contractor loan, and the cash flow facility carried interest and was paid by my employer.

where is your proof?"

end of email extract

Can anyone please advise from a legal point of view and from an accountant point of view as to step that can be taken.
As a layman I barely understand the jargon that is being used and would welcome straight forward answers /steps that can be taken.

Many Thanks

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