I’m writing to the taxman

Letter sent to Liverpool tax office today:

4th July 2008
Dear Sir/Madam

I wish to bring your attention to an individual who is claiming to be self-employed who I believe may not be registered as such.

Yesterday Mr Peter Kilfoyle MP stated that “I’m technically self-employed” [see here].

My understanding, having previously been self-employed myself, is that a person who is self-employed is required to register as such with 3 months and is liable for class 2 and class 4 NI contributions.

I would be grateful if this matter could be investigated.

Yours faithfully

Hywel Morgan
CC Mr Peter Kilfoyle MP

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6 Comments

  • I doubt that they pass the tests to be classified as self employed in that:

    They only have one customer

    Their work is for a fixed salary based on time served with no element of risk being born as to the costs to be incurred or capital exposed to loss

    They are accustomed to taking instructions from others as to how they are to do major parts of their work and have little discretion as to what and how they deliver their work (controlled by the party whips, parliamentary procedures and government ministers)

    They don’t provide the “tools of the trade” but rebill their equipment to their employer

    They don’t have control over their place of employment.

    They have a pension provided directly by their employer based on salary and time served with no element of personal provision or financial risk.

    If they are employed then their business expenses need to be justified against the schedule E standard of “wholly, necessarily, and exclusively for the purposes of the business”. Against this standard mortgage interest (unless the cost is less than hotels or renting a place suitable for the MP’s personal accommodation when attending parliamentary business but not for a family home), items on the John Lewis list, any any thing without supporting documentation would be treated as taxable income. (plus interest and penalties for late disclosure and payment).

    Those are the rules for the rest of us and HMRC must be required to apply the same standard to MP’s.

  • David Heigham 4th Jul '08 - 8:16pm

    When I looked that up in my schooldays, MPs had been trated as self-employed ever since they first were paid. They also paid self-employed insurance from when the NI system was set up.

    The tax mischief, which is much worse than it was in my schooldays, is how MPs expenses are policed. The House of Commons own officials “police” MPs expenses, and the tax inspectors don’t. My impresssion is that this results in some MPs receiving as tax-free expenses substantial chunks of money which in Hywel Morgan’s (or any other self-employed person’s) hands would have been treated as taxable income.

    Is there a tax lawyer or ex-tax inspector on LDV who can give us more than a rough impression on this?

  • Spanny Thomas 6th Jul '08 - 2:03pm

    Robert D, any good accountant can get around IR35 as it is so badly drafted to be unworkable.

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