Freelancers told of accountants' knowledge gap

Freelancers who use general accountants on the high street to manage their tax affairs are doing the equivalent of ‘going to a GP when they really need to see a specialist.’

A survey of 12 traditional accountants found that not a single firm knew that the “targeted solution” it offered to freelancers was caught by the MSC legislation.

The firms displayed a “lack of detailed knowledge” of both the MSC and IR35 legislations, and a “worryingly vague attitude” to the need to comply with them.

On IR35, which has shaken-up the freelance marketplace since 1998 by taxing freelancers as employees, one firm said contractors “didn’t need to worry about” it.

Another accountant said IR35 had “died a death” – advice which could potentially land freelancers with a hefty tax demand, said Freelance World, which ran the survey.

Alasdair McGill, managing director, said: “What these firms should be telling their prospective clients is that IR35 work should be handled by an employment law specialist…, not telling them that it is nothing to worry about.

“Accountants should not be issuing advice on IR35 unless they have real experience of employment status and are confident about defending their clients in front of the tax tribunals.”

He added that freelancers who heeded the advice of the high street accountants could also face credit problems, because they risk being placed on HMRC’s blacklist for non-compliance.

“It is quite clear that many high street accountancy firms simply do not have the expertise to advise contractors on key legislation, compliance and management of their specific requirements,” Mr McGill said.

“We have been genuinely alarmed at the poor advice being given by some firms to prospective clients. It is like going to a GP for treatment when you really need to see a specialist consultant.”

Freelance advisors say there is normally a growth spurt in the number of tax ‘specialists’ marketing to freelancers after new legislation or new entrants in the market.

Revenue & Customs has admitted to FreelanceUK that some advisers to micro-businesses “sometimes present a too simplistic picture of whether the Intermediaries legislation (IR35) applies or not.”


16th July 2009

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