HMRC Employment Status Review

[MrPAYE]

One of the more common posts on this forum is the old employed v self employed argument so I thought my current article may be of interest which summarises the processes involved when HMRC conducts a review on self employed workers.

http://optimumpaye.co.uk/index.php?main_page=news

This may also serve as a reminder to those people who continually refuse to acknowledge this as an issue that the numbers can be huge if you get it wrong.

Any questions or comments you know where I am :cool:

[David Griffiths]

The article refers to an opening meeting, but there is no obligation on the employer to attend such a meeting, even though HMRC will huff and puff if it is refused. The only legal requirement is to make the books and records available for inspection.

We try to have all compliance reviews carried out at our premises, and make it clear in advance that the director/employer will not be present, and ask for any questions in writing.

Too many people get confused with their terminology and HMRC will seize on any slips and try to claim that as "proof" of employment. Much better to deal with these things in writing.

Don't forget as well that in more than one recent tribunal case HMRC have been criticised for going in to these reviews with a clear preconception that all of the subcontractors are employees. That of course is something that most accountants have known for years but it's good to see the tribunal chairman saying so

[MrPAYE]

The article refers to an opening meeting, but there is no obligation on the employer to attend such a meeting, even though HMRC will huff and puff if it is refused. The only legal requirement is to make the books and records available for inspection.

We try to have all compliance reviews carried out at our premises, and make it clear in advance that the director/employer will not be present, and ask for any questions in writing.

The article was written mostly for entities larger than one-man band companies. For the clients I normally serve, it would be highly unusual (in fact I can't recall any) where the Employer Compliance Review/Employment Status Review would not be carried out on the site of the employer and in all cases an opening meeting will/and does happen. Some clients are nervous about this (those that have something to hide usually) but for those clients I would normally be on hand to guide them through discussions and to deal with any tricky questions.

Of course there is no obligation to comply with all of HMRC's requests in this area but I would normally recommend that the client does play the game as far as possible as it can make a huge difference to the overall settlement, certainly before the new penalty regime came in.

I do agree with your comment that HMRC sometimes have preconceived ideas that all self employed workers are employees. That is the root cause of so much time wasting as a lot of HMRC challenges should never be made in the first place as their position is often too weak when the officers are refusing to see the woods for the trees