‘Should my teenage son be reporting his income to the tax office?’

15 january 2013

Q: My 15-year-old son applied for a job over the summer holidays and was told he was suitable. The firm took up his references and then said they couldn’t employ him because he hadn’t paid tax on his previous earnings.

He’s only ever earned a few pounds here and there through babysitting, washing cars for neighbours and so on. The only way the firm can know what he’s earned is because he gave one of the neighbours as a referee.

He’s still at school so he hasn’t had time to earn enough to pay tax. Is this reasonable? He’s so disappointed at missing this opportunity. Shouldn’t we be encouraging young people to find summer jobs?

MK

A: Just about every teenager in the UK could find themselves in this trap if all firms took this rigid approach. And HM Revenue and Customs (HMRC) would be in a terrible bind if it decided to send tax inspectors out chasing schoolchildren for details of their earnings.

Anyone, regardless of age, who earns enough in any tax year to exceed the personal allowance (£8,105 in 2012-13) is likely to be liable to pay tax on the amount over and above the personal allowance. Anyone earning money through self-employment should declare it to HMRC even if they aren’t liable for any income tax on the earnings. So, in theory, your son should declare his earnings to HMRC.

But given that HMRC isn’t in the habit of checking up on children and young people, it must feel it’s unlikely that there are vast amounts of unpaid tax owed by teenagers. So, it seems odd the firm is being so strict.

This is probably a case of an HR person being a little overzealous. I would be tempted to write to the company’s head of HR explaining that your son has never earned enough to pay tax and asking them to reconsider.

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Q: We live in a flat which has a long lease. Along with our nine neighbours in the block we have set up a company which owns the freehold and we all own a share in that company.

We are having problems with the property managers we’ve appointed to carry out maintenance. That has led to disputes and as a result the two flat owners who are the directors of our own company have decided to resign. I don’t think anyone else in the block has time to take on being a director but I’m worried about what will happen if no one steps forward at the residents’ meeting next week.

I have called Companies House and been told that if there are no directors for 28 days the company will be wound up. What would that mean in real terms?

CS

 

A: If there are no new directors appointed at the end of 28 days Companies House will step in and wind the company up and the company’s assets will belong to the Crown. So in effect the freehold will belong to the Crown.

I suspect that people are just not facing up to the fact that they will have to put a bit more time and effort into their homes than they would like. As you each own a share of the freehold, you and your neighbours are jointly responsible for the whole of the building as well as your own individual flats. It is therefore in your own interests to look after it.

Put in writing what Companies House has said and give everyone a copy before the meeting. If you are prepared to put yourself forward as one of the new directors I’m sure you will find others are prepared to follow your lead.