Witch-hunt of the week: Freelancers

The open season on interim managers is gathering pace. It’s moved beyond people covering senior public sector roles to include anyone who is doing contract work for public bodies. The Sunday Telegraph published this non-story at the weekend. Apparently, Moira Stuart, who fronts HMRC’s publicity campaigns, invoices for her services through her own company. Well knock me down with a P.60 – I’m sure everyone thought she was an HMRC employee. And a BBC employee. And an employee of anyone else she happens to work for.

Fair play, the article is a skilful piece of tabloid journalism. It invites the reader to draw certain conclusions without actually making any allegations at all.

What have the Telegraph found out?

Companies House filings reveal that Miss Stuart is the sole director and shareholder of Moira Stuart Limited, which was created in April 2010, a few days before Labour’s 50 per cent top tax rate was introduced.

The firm’s accounts reveal that £22,607 was paid into the company in 2010/11. After £1,749 of administrative expenses were taken into account, Miss Stuart paid corporation tax on this income of £4,380.

Had these earnings been subject to income tax she would have incurred a bill of up to £11,303. She may also have been liable for National Insurance contributions.

Well, yes, it would if Miss Stuart had earned money elsewhere which took her over the 50p tax threshold. She would also pay tax, on top of the corporation tax, on any dividends she took out of the company. There is, however, no evidence presented in the article that she would have been a top rate taxpayer.

Neither the Telegraph, nor the Guardian, which also ran the story, actually accused Miss Stuart of tax dodging. They didn’t need to. There are plenty of useful idiots on Twitter who will make the blunt accusations that the journalists know they can’t back up.

I was surprised to see accountants joining in.

Because, as any fule kno, £22,607 is well below the 40% tax rate and a long way from the 50% one.

You’d think elected representatives would know better too.

 

There is no evidence to support any of these statements. But the folk at the Telegraph and Guardian knew that, which is why they didn’t make them.

Moira Stuart works for the BBC and HMRC, and possibly other organisations. It would make no sense for her to be on the payroll of all of them. She’s a freelancer and freelancers have companies.

We don’t know whether she has any income from elsewhere so we don’t know how much tax she would have had to pay. Even if we knew what her income was, tax calculations are fiendishly complicated and determining the point at which someone becomes better off working through a limited company than being employed is dependent on a number of factors. I’d need to be really sure of my facts before accusing someone else of setting up a company to dodge tax. There certainly isn’t enough proof here.

But mud flies and sticks once a story like this gathers momentum. The Freelancer and Contractor Services Association has written to MPs asking them to tone down the rhetoric against freelance companies. “We must ensure we do not create an orchestrated witch-hunt,” warned Chris Bryce, of the contractor’s trade association PGC.

I think he might be too late.

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10 Responses to Witch-hunt of the week: Freelancers

  1. Pingback: Witch-hunt of the week: Freelancers - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. Darren Newman says:

    As the sole Director of Darren Newman Employment Law Ltd, I’m with Moira on this one!

  3. Interim Managers are an important senior management resource for both the Private and Public Sector to call upon to bring about change and improvements. They are in business on their own account and are already subject to additional taxes as well as PAYE and NHI.

    I have set out in the posting below how Interim Manager’s are currently taxed in their own companies.

    http://www.interimconnect.co.uk/blog/interim-managers/the-case-for-interim-management-ed-lester-student-loans-company/

    Mike Measures FCA
    For Interimconnect a network of 1500 career interims.

  4. Paul Johnston says:

    I suspect that Moira does earn enough income to pay higher rate tax – I certainly would have thought it would be more surprising if she didn’t than if she did. In any event, that is her business and good luck to her! Similarly, if setting up a company is the most sensible way of managing her affairs, why shouldn’t she do that? Surely the only real potential public issues here are: 1) if she was grossly overpaid for her HMRC work and some other celebrity would have done it at least as well for much less money, but no one seems to be suggesting that. 2) if she has broken the rules either in setting up her company or in how she channels her income through it, but again no one seems to be suggesting that or 3) if someone wants to argue that the rules for setting up these companies and/or channelling income through them should be changed, which may be the case for all I know but still wouldn’t really be any responsibility of poor old Moira🙂

  5. john b says:

    Equally, dividend income is still personal income. If Moira wants to spend her well-earned cash on personal-type-things, she’ll need to take it out of the company and pay income tax on it.

  6. jonathan says:

    As a former interim myself – the mantra used to be “If you can’t do it right yourself, you can expect to pay handsomely for my time and expenses to do it for you”🙂

    I don’t think hmrc have anyone quite so engaging as Miss Stewart?

  7. Annabel says:

    Freelance workers, interims, sub contractors, and others are all legitimate players in our economy. If we take the current emotions to their natural conclusion it will be a legal requirement for everyone to be employed by someone else (or unemployed).

    This would leave start ups and entrepreneurs in difficulty since they normally start on their own without a boss or employees, working freelance, doing what they do, until they get established and take on staff.

    Not everyone who is a ‘boss’ is unfairly highly paid or unfairly on the fiddle. The general resentment of anyone who is not on basic wage and working for a multi national or the state is just a deflection from the real issues that we face.

    1) Billions have gone missing from various economies and bankers/politicans are resigning and standing down all over the place.
    2) Our tax scheme is so complex no-one knows how it works except people who lunch with the HMRC and do deals
    3) We have a lot of resentment floating about and the great British public needs a target
    4) Picking on a women of colour who has made a success of herself relieves a lot of visceral tension in some quarters

    We need to sort out how we run our world, our economy and our tax system and put aside visceral resentment and the flotsam and jetsam of this type of thing and start building a way of living and working that allows us our individual freedoms, doesn’t charge us massive amounts of tax for a declining service from the state and deals realistically with the issues we face of longevity, empty coffers etc. .

  8. Jane Wharam says:

    What a ridiculous, non-story, as you say. The self-employed make up the backbone of this country and many of us scrape by rather than lead lavish lifestyles. If Moira sells her services to anyone who will pay her and then pays the tax on her earnings, good for her. She was sacked by the BBC for being too old, so came back as a freelancer and got the HMRC gig; surely that’s showing the entrepreneurial spirit we should be proud of.

    Many companies buy in services from people they couldn’t afford to have permanently on the payroll – it just makes sense – and those of us who sell our services hope to find enough companies to keep us afloat. But we have none of the security offered to an employee and none of the perks, so we make our money where we can to buy the things like healthcare and holidays ourselves.

    Show me a public servant who could juggle varying work loads (and no work at times), manage tax issues, chase payment for work done and rarely go on holiday and I’ll show you one who has been ‘let go’ and turned to self-employment. Go, Moira!

  9. Dipper says:

    I’m just back from a week’s training to get certificated in a management skill where over half the particpants were freelancers like myself, improving our skills at our own expense.

    Yes you pay less tax, but you don’t get a pension from your employer-sorry-customer, and you don’t get sick pay or holiday pay. And your contract is easier to terminate. And I’m owed one month’s pay by my previous client who went bust – the perms all got paid.

    It’s a different style of employment. Both should be available to corporations and workers.

  10. Pingback: FCAblog » In defence of Ken Livingstone

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