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.

Public face of the Inland Revenue dodging tax! “Tax doesn’t have to be taxing” Yes for the wealthy tgr.ph/yvfLPs

— Gavin Boyd (@gavinboyd2012) February 20, 2012

— Guide Public Affairs (@Guide_PA) February 20, 2012

Just read that even Moira Stuart is a tax avoider, surely a sign that we’re on our way to being the next Greece.

— Jeff Breslin (@jeffbres) February 19, 2012

I was surprised to see accountants joining in.

Moira Stuart set up firm to avoid top tax rate bit.ly/AucS1o

— AccountingWEB.co.uk (@AccountingWEBuk) February 21, 2012

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.

Shame on Moira Stuart along with all the others who pay their inflated wages into company accounts to avoid 40/50% Income Tax.

— Jenny Rathbone (@JennyRathbone) February 20, 2012

 

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.