A survey out last month reveals almost 40% of contractors and freelancers have suffered HRMC penalties. Paraplus found almost four in ten self-employed professionals had been fined for getting their tax and VAT wrong, with up to 600,000 getting at least one penalty.
What’s the problem?
The commonest penalties are for late submissions, perhaps because so many people find the guidelines baffling. 55% of those surveyed admitted they had difficulty understanding them. 42% said complying with HMRC guidance is their biggest worry. And almost two thirds of contractors and freelancers said the paperwork involved worried them the most.
It looks as though self-employed professionals of all sorts are struggling to keep up with HMRC’s constantly-changing requirements. On the other hand you can always hand over to a professional and save yourself all the time and hassle. Or get proper training. People aren’t that helpless, and professional help isn’t that expensive.
Almost 54% cent of self-employed workers said they didn’t really understand what they could and couldn’t claim. Fair enough. But it doesn’t take much nous or effort to find out – there’s a wealth of information online and any decent accountant will clarify it for you. On one hand, people deserve a level of sympathy and understanding. On the other hand, self-reliance is better for business than passive helplessness. If you need to know it, there’s nothing stopping you from learning it.
Ignorance is no excuse
HMRC doesn’t consider ignorance an excuse. Yes, their guidance is less than helpful, often obscure and difficult to understand. But this is the age of the internet. Everything you need to know is out there, waiting for you to find it. In an ideal world the tax and VAT man’s processes, procedures, rules, forms and guidelines would be simplicity itself. But this isn’t an ideal world and we need to cut our coats according to our cloth for the time being.
There are around 1.6 million contract workers in Britain and while there’s a clear need to help them by making tax matters clearer and easier to understand, are they also responsible for educating themselves, or using a small proportion of their profits to pay someone to do it for them? What do you think?