The self-employment deception will leave Osborne wrong-footed over tax returns

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it.

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it. [Image: Ros Asquith in The Guardian]

It seems a surge in the number of people who say they are self-employed is not (solely) due to a DWP wheeze that gets people off the unemployment statistics after all.

Instead, Flip Chart Fairy Tales warns that a lot of people are staying in self-employment rather than becoming employees again or retiring.

This suggests that either they have not been able to reach their target in terms of pensions, or there are no jobs available for people of their particular expertise or experience. The latter seems likely to Yr Obdt Srvt, who is currently trying to make Vox Political a workable concern in order to make a buck or two.

FCFT warns that “this is old-timers seeing their business shrink, rather than newbies trying to find their feet, under-charging and messing things up”.

The figures also show an increase in the number of self-employed tax credit claimants, lending credence to Vox Political‘s long-held belief that Job Centre Plus advisors have been telling jobseekers to pretend they are self-employed in order to get them off the books – let’s not write off that idea too quickly.

And a steady rise in non-VAT-paying businesses not only tells us “a lot of low-profit and low-turnover businesses are hanging on in there, or a lot more of them have become low-profit and low-turnover businesses since 2008”, it tells us that George Osborne will have a nasty surprise in January, when their tax returns come in.

If they are not paying VAT, they are not clearing the earnings threshold that would make such payments necessary. This mitigates against their earnings having increased significantly since the disasters of 2008-2012, when self-employed earnings fell by £8 billion.

So it seems our dancing Chancellor (see yesterday’s post) will find that either the music stops or the tune will change significantly…

Less ‘Gold’ by Spandau Ballet; more ‘I Don’t Need This Pressure On’.

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10 thoughts on “The self-employment deception will leave Osborne wrong-footed over tax returns

    1. Mike Sivier Post author

      I think it’s to do with this now being a WordPress.org blog, rather than on WordPress.com – a correspondent did write in a while ago with a link to a site that (they claimed) makes it possible to reblog ANYBODY’S articles, not just WordPress.com, and of course I’ve lost track of it. Will try to dig it up and check it out.

  1. thelovelywibblywobblyoldlady

    As you know Mike, I have some knowledge of taxes. I have said this before and I’ll say it again; self employment is a minefield.

    I’ve provided links below that support that comment:-

    https://www.gov.uk/vat-registration-thresholds

    http://www.hmrc.gov.uk/working/intro/class2.htm

    https://www.gov.uk/working-tax-credit/eligibility

    http://www.hmrc.gov.uk/sa/need-tax-return.htm

    With regards to tax credits, the tax credit office WILL recover tax credits if they are of the opinion that the self employed person being paid tax credits has not demonstrated that they have “worked” 30 hours or more a week.

    There is a danger too that the individual could have to undergo a “status enquiry” in order to establish if they are truly self employed.
    There is no legal definition of self employment, the legislation is contained in a statutory instrument referred to as the “Cat Regs” or Categorisation of Earners regulations 2005

    http://www.legislation.gov.uk/uksi/2005/3133/contents/made

    If HMRC do not believe you are truly self employed (this could be the case where an individual is only providing goods and/or services to one person or organisation rather than several) then the individual, the person receiving the service/goods or the organisation will have to make good the tax and national insurance due, plus interest (mandatory) plus penalties based on the “behaviour” of the individuals concerned (were they careless, negligent etc)

  2. Daniel Kouble

    Very similar situation to mine. I’m a full time single dad and have been setting up as a self employed freelance designer/illustrator. Due to my child being under 5 there was until now no pressure from the job centre, as I’m not on jobseekers. but I went there for advice last year about setting a business. The logic being I can work from home with no extra childcare costs. And the first thing they suggested was the tax credit option. Which I thought about but decided against at the time.(thank god) I instead utilised the lone parent option of being able to earn 20 pounds a week, and asked if I can earn this monthly at 80. and apparently you can. as long as you account for it and produce receipts. I would say this is the best way to build up to full self employment.Which I more or less have now
    . Although this would be much harder for someone on jobseekers as they tend to have more pressure to come off benefits. Note: when it came to advise about self employment the job centre were utterly useless. the only goal seems to be to get people off the benefit figures at all cost. There is absolutely no career advise whatsoever.

  3. Craig Gilman

    I’ve been on the New Enterprise Allowance and don’t earn enough to break even let alone pay myself a salary. I’m not earning enough to pay tax on my earnings either.

  4. hugosmum70

    i know they dont take into account whether a person is fit to do a self employed job. it doesnt matter to them..they encourage people to do things like setting up a photography business etc. which is stupid seeing as most people own a digital camera themselves these days.plus more photography businesses around these days as well. no training given in business studies , book keeping or anything.i know someone this is happening to for a 2nd time. first time it failed. he is on ESA but in WRAG which he should not be in.anyway.but people try these self employed things to keep em off their backs even when they know the chances of success are slim,but job centres arent bothered as long they are not on THEIR books .either as unemployed or sick.

  5. DeborahWales

    The jobless figures are also manipulated by the fact that so many are forced into part time work on zero contract hours when in the past, they would have held out for a full time job. Self employment is only part of the fairy tale of reducing the jobless figures which are manipulated to show ‘how well this government is performing’

    1. WordPress.com Support

      Yes, and there’s Workfare to consider as well – people on the mandatory work activity scheme aren’t counted in unemployment statistics. We’ve been over this many times in the past, but it cannot be repeated often enough.

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