Taxation Assignment Example | Topics and Well Written Essays - 1500 words

Taxation - Assignment ExampleWhether soulfulness is active or self employed depends upon the terms and conditions of relevant engagement. The revenue enhancement and National Insurance contributions (NICs) rules do, however have special rules that apply to plastered special categories of workers in certain circumstances. If you work for some angiotensin-converting enzyme else it is important to know whether you are working for that person in employed capacity or in a self- employed capacity as an self-governing contractor. (HMRC)ii Self employed taxpayers have the advantage of claiming wide range of expenses against the receipts of self employment go. The decision to become self employed can as well as be affected by tax system.(David G Blanch flower and Chris Shad forth)iii There is to a fault an advantage of payment of income tax by instalments as against taxes macrocosm withheld by the employer beneath the PAYE scheme. It becomes extremely difficult in many cases to disti nguish between self employment experimental condition and employee status of a tax payer. Whenever any taxpayer is working on part time basis with more than one entity it is always the desire of HMRC to consider the tax payer under the employee status. This is because of weak and quick collection of taxes and NI under PAYE scheme on an income where only limited range of expenses can be claimed and thus providing higher sum total of taxes. In fact these are the nature of activities of the taxpayer that decide the status of the tax payer. If there exists a contract of services then it is easy to consider taxpayer as an employee of the entity with whom the contract has been executed to render the services. But when such contracts exist for more than one entity the taxpayer would be treated as self employed rendering services to a number of entities. What will happen when there is no such contract? Under such conditions the issue is decided on basis of certain criteria. The main crit eria are control over the performance of activities, fixidity of payment of remuneration even when the entity is not earning, ownership of equipments used by the taxpayer during the performance of the duties, and exclusivity of providing services to one entity among other considerations. In our case surface-to-air missile is now providing services exclusively to wolfram London Company, and that is why HMRC wants tax him under the status of an employee and not under the status of as a self employed person. When you are not your own master and control of your activities and the performance is guided by the person providing you the remuneration, the status of the taxpayer is treated as an employee of the person providing him/ her the remuneration. You are responsible for your own taxes and NI contributions (Directgov)iv In the case of Sam his activities are now completely controlled by West London Company. Company is providing a fixed monthly remuneration of ?7500 even though he is op erating from home. At the same time company is also providing him access to a desk, telephone, computer, and also stationery in the office. No reimbursement of expenses is allowed under the arrangement as the remuneration is fixed at ?7500 per month. There is exclusivity as Sam is also not providing services to any other entity or client. It should be noted that employment income is taxed on the basis of receipt of remuneration and not on accrual or earned basis which is applied when the taxpayer