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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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. We are a small company that eighteen months

Customer Question

We are a small company that for around eighteen months hired a consultant to work in and help sort out our business. We paid upon presentation of monthly invoices.
We found out that in reality working with us was the consultants only job, so seven months ago we took her onto the company payroll.
It is now time to part company with the consultant and I hope you can tell me what the HMRC would think about any tax liability that might be generated from us having paid her for those first eighteen months.
Submitted: 3 years ago.
Category: Tax
Expert: replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me
You engaged this consultant in good faith on the understanding that the consultant was self employed and gave the company invoices for services rendered.
Did you do any checks to satisfy the status i.e. ask for UTR number etc

You say you have the consultant on your payroll for the past seven months please tell me if you earnings were taxed at source.

many thanks
Customer: replied 3 years ago.


The consultant is known to us socially. She said she would be happy to sort out her own tax. We left it at that. It was only when I heard she was also claiming benefits I realised she was probably not declaring her income. That's when I put her on the payroll and gave her a new job within the company.

Yes she has been taxed at source since she formally joined the company as an employee seven months ago.

She has failed in her quest here with the new job, she now has to be let go.

I am as nervous as a virgin at a prison rodeo that HMRC will come looking to us for unpaid tax.

The consultant has ample assets to pay any tax the HMRC might ask her for, if it turns out that way.

Hope all this is clear.


Expert: replied 3 years ago.
Thank you for your prompt reply.

It appears you put matters right when facts were known and in my view you are not negligent/guilty.

You should get a declaration/statement from the person concerned that she is responsible for tax on monies received as self employed consultant for her initial appointment when she raised invoices to you.

You shouldn't get too concerned. As you have stated, the consultant has ample assets to discharge her tax liability from consultancy payments to her.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.