Tuesday, 1 May 2018

Complicated tax rules just seem to create a lot of well-paid work for middle-men

When I began doing occasional daily shifts as a researcher on BBC Radio 2's The John Dunn Show 34 years ago, I had to sign individual one-page contracts for each day I worked in order to receive the miserable pittance I'd been offered. When the money eventually arrived in my bank account, it had been taxed at source. I hunted down the admin bod responsible for freelance contracts and asked him why the BBC hadn't paid me the full contracted amount and left me to take care of the tax as as part of my annual self-employed tax bill. The Inland Revenue insisted on it, he explained. But, I...

...objected, I wasn't a BBC employee, I wasn't receiving any of the considerable benefits that BBC employment entailed, I'd been registered as self-employed for many years, and my paltry BBC earnings for that year would represent a mere fraction of my earnings from other sources.

The apparatchik (crappy suit, nasal estuarine voice, comb-over) smiled the smug smile of someone with an index-linked pension to look forward to, shrugged, and, sounding as pleased as punch - and safe in the knowledge that I was a powerless nonentity who couldn't do his career any harm whatsoever - said: "Take it up with the Inland Revenue. My hands are tied." Although I knew he was lying through his misshapen teeth, and despite the fact that tying his hands and administering a severe beating would have been deeply satisfying, I was already eyeing up the prospect of a more permanent stint with Auntie - so I thanked him for nothing, and let it lie.

Spool forward three and a half decades, and a large number of BBC presenters have (has?) brought a case against the BBC for allegedly forcing them to give up their staff status (with all the benefits that go with it - paid holidays, sick leave, pensions etc.), and turn themselves into freelancers by setting up limited liability companies for tax and national insurance purposes. But the Inland Revenue decided (as far as I can understand it) that too great a portion of their income derives from the BBC for them to be considered freelancers, and has presented many of them with eye-wateringly high bills for back-tax (admittedly, the bills are high because these people seem, on the whole, to be rather well paid).

Fourteen years ago, when I left the BBC and became a self-employed consultant, I had the choice of setting myself up as a limited liability company (you pay less tax, and, as the term implies, you get to keep your home if you go bankrupt), or as a sole trader - which is essentially what I had been as a freelance writer. Rather than face the prospect of becoming embroiled in negotiations with the Inland Revenue at some future date over issues which would no doubt have baffled and upset me, and being unwilling to spend any time or money trying to understand what all the rules relating to LLCs were - and what the implications might be - I opted for sole trader status. I probably paid a lot more tax than I needed to, but I also slept better (apart from when it came time to tackle my quarterly VAT returns - I never could figure out what the fuck they were all about, and I was too mean to pay for professional help).

I'm not going to apportion blame regarding the BBC presenters' dilemma (their appeal against their tax bills is currently being considered by a tribunal), but one thing is certain: the system stinks. It stank 34 years ago, and it still reeks. The main beneficiaries of this whole ghastly mess would appear to be the army of accountants, lawyers, civil servants and full-time company admin types who inevitably get involved in this sort of dispute: all this fudge and muddle keeps them busy and justifies their jobs and salaries.  What incentive is there for them to push for reform of a system seemingly designed to create as much work for them as possible? If all these people's salaries were based on the system running smoothly, does anyone seriously imagine we wouldn't by now have a clear definition of the difference between an employee and a freelancer? I've been an employee, and I've been a freelancer - and I never had any difficulty figuring out which of the two I was at any time: I just had to look down and see whether there was a safety-net beneath me.

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