And another thing ...
After years of fighting it I finally succumbed and paid £41k in taxes and NI and completed their stupid forms last year. I hated doing it. Being told that it was my choice BUT if I didn't do it I would be heavily fined always annoyed me. The whole idea of retrospective taxing has always annoyed me. But I did it and drew a sigh of relief that it was finally over. Then early this year I received a letter stating that because I hadn't met all of their demands I had to pay a penalty, apparently I hadn't completed the forms correctly, I had written "I don't want to do this, I am doing it because I have to", they didn't like that, however when I'd previously called HMRC and asked for advice on how to complete the forms they stated "we cannot advise you how"! I complained and two months later received a letter stating that my forms were ok but the issue was I hadn't withdrawn the appeal ... I didn't withdraw the appeal because they'd already rejected it, so I thought it was irrelevant. I finally received a penalty for £12,767, a third of which was for meeting their demands after the deadline, which I only did because their initial letter didn't mention the appeal! I appealed against the penalty but they rejected that. I have re-appealed and am awaiting the outcome but am not hopeful.
Yesterday I received a letter which stated that the National Insurance I'd paid for 2003 and 2005 was no longer due so I had been issued a credit, great, but attached was a Self-Assessment statement showing that I'd been charged interest of nearly £12k on the tax for 2003 and 2005 (until I purchased a tax credit in 2009 ... which I did as soon as I was told by HMRC that interest would be due on the tax) so I in fact owe them another £8k+.
The whole idea of retrospective taxation is outrageous and I still can't believe they've got away with it.
This whole saga will have cost me £62k (which is more than 50% more than the tax I initially saved) for using a system which was legal in 2003 and 2005 but subsequently deemed not to be. I had the foresight to purchase a tax credit to cover the taxes and save money rather than enjoying it, but how many people are going to be bankrupted by these incessant demands from HMRC? The tax won't be the end of it, there's the interest and penalties which could (more than) double the taxes which (HMRC have decided) are due.
I would like to add that (contrary to HMRC's assertions) I was not an employee. Employees receive paid holidays, paid sick days, end-of-year (and other) bonuses, training, career progression, pension, etc, the list goes on an on. I received none of these. So how exactly was I an employee?