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Where Taxpayers and Advisers Meet

Freelance, Years of Unpaid Tax

b3ackie
Posts: 5
Joined: Wed Nov 06, 2019 6:01 pm

Freelance, Years of Unpaid Tax

Postby b3ackie » Wed Nov 06, 2019 6:25 pm

Hi all, firstly many thanks for any advice given here, I am a complete idiot when it comes to financial matters.

For the last few years, since about 2014, I think, I have worked freelance, with no fixed abode, staying with friends etc

After a few years of being unemployed, I slowly started to get some more freelance work working abroad, primarily in the US writing custom software and the like. I was never quite sure if the work would last a few more weeks, months or even years.

During this period I have never registered as self employed or paid any tax, NI contributions etc.

My yearly incomes (calculating between April of each year) range from ~£6000 up to ~£30,000 depending on the year. Once every few months I try and sort this situation out and after doing research get completely conflicting information on the best way to proceed.

Mainly, I'd love some advice on the best way to proceed to sort this mess out and before I do try and get some kind of idea of what kind of financial trouble I'm in.

1. Can I claim expenses on my income retrospectively?

2. How do I go about registering as self employed when I don't have a fixed UK address, or even know where I might be on a month to month basis? My bank account is currently registered to an old address. I would rather not involve any friends/relatives in this mess.

3. Should this be the job of an accountant to sort out?

4. I have little in the way of assets, no dependencies/bills etc, very few belongings and very little in the way of disposable income, I live very much hand-to-mouth as it were.

5. If I contact HMRC do they contact the people I have worked with/for? That would almost certainly guarantee the loss of any future work with those employers.

Again, any advice here is greatly appreciated.

darthblingbling
Posts: 281
Joined: Wed Aug 02, 2017 9:09 pm

Re: Freelance, Years of Unpaid Tax

Postby darthblingbling » Wed Nov 06, 2019 7:37 pm

You carried out the work in the US?

b3ackie
Posts: 5
Joined: Wed Nov 06, 2019 6:01 pm

Re: Freelance, Years of Unpaid Tax

Postby b3ackie » Wed Nov 06, 2019 7:42 pm

Yes

b3ackie
Posts: 5
Joined: Wed Nov 06, 2019 6:01 pm

Re: Freelance, Years of Unpaid Tax

Postby b3ackie » Wed Nov 06, 2019 7:42 pm

At least, the vast majority of it. I would say on average 60-80% of my time is spent there.

b3ackie
Posts: 5
Joined: Wed Nov 06, 2019 6:01 pm

Re: Freelance, Years of Unpaid Tax

Postby b3ackie » Wed Nov 06, 2019 7:56 pm

My bank account is based in the UK and I work on temporary work VISAs, so I don't have a US social security number, bank account, or anything like that.

darthblingbling
Posts: 281
Joined: Wed Aug 02, 2017 9:09 pm

Re: Freelance, Years of Unpaid Tax

Postby darthblingbling » Wed Nov 06, 2019 9:48 pm

How much time are you actually spending in the UK?

hendersontax
Posts: 28
Joined: Wed Jun 19, 2019 5:04 pm
Location: Manchester
Contact:

Re: Freelance, Years of Unpaid Tax

Postby hendersontax » Thu Nov 07, 2019 11:57 am

From a UK perspective, you'll need to consider first whether you are resident here under the Statutory Residence Test for each year concerned. If you're spending significant time outside the UK, then you may be non-resident here, in which case if you carry out freelance work in the US (physically in the US) then this will be outside of scope of UK tax. You should seek separate advice as to the US position as I expect they would wish to tax that income. If both the UK and US wish to tax the income then you'll need to explore which country has 'primary taxing rights' under the UK-US treaty and claim double tax relief in the other. UK-sourced income (by which I include income from activity physically carried out in the UK, even for a US client) will always be taxable in the UK, subject to the terms of the double tax agreement.

To answer your questions:

1. Yes you can claim expenses retrospectively, but there is a 4-year window for submitting a tax return so you may have difficulty for earlier years.
2. You do need to offer an address in order to register with HMRC, even if you have no fixed abode. I appreciate you may not wish to involve friends or family but if one of them can help you provide a c/o address that would probably be easiest.
3. There's no obligation to involve an accountant to resolve this for you - indeed you may struggle to get an accountant to agree to engage with you on this matter if you are unable to offer them a permanent address. Naturally they will wish to charge fees, unless they are willing to work on a pro bono basis. If your current income is less than £20k pa, then you should qualify for support from TaxAid - but bear in mind they will only be able to support on the UK side. If you are in vulnerable circumstances then HMRC have an 'Extra Support Team' to help you file tax returns should you need to - you should ask to be transferred to them if you feel this applies to you and they should treat your case sympathetically.
4. If you end up with a tax debt you cannot pay, then you have a number of options available to you. Again, TaxAid will be able to help you with this.
5. HMRC do have powers to request information from third parties but generally they will only do this if you are uncooperative in providing this information yourself. If you are genuinely self-employed, then HMRC would not normally have any business pursuing your clients for information. However, you mention the word 'employers' - if you actually had an employment relationship with a UK-based engager who should have operated PAYE, then clearly HMRC are going to be interested in that. Whether or not they pursue it is a different matter.

I would encourage you to get this resolved as soon as possible, not only it will take a huge weight of your shoulders but it will play in your favour to come forward voluntarily when it comes to penalties for the non-compliance.
Tom Henderson ATT CTA
Henderson Tax Consulting
www.hendersontax.co.uk

b3ackie
Posts: 5
Joined: Wed Nov 06, 2019 6:01 pm

Re: Freelance, Years of Unpaid Tax

Postby b3ackie » Sun Nov 10, 2019 10:12 pm

Thank you so much for your advice!

I definitely count as a resident of the UK under the Statutory Residence Test, it's also part of the conditions of my working Visa in the US.

My income (I assume this means net income) is usually over the 20k limit so I don't think I can go for Tax Aid.

Employers was the wrong word, I work on a freelance / self employed basis, I've just never registered as so.

Are these the steps I should follow?

https://www.gov.uk/government/publications/hmrc-your-guide-to-making-a-disclosure


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