Letter needed

[julieanne4]

Hi

We are a courier company who use a lot of subcontractors, we have had a problem in the past whereby one subcontractor did not take responsibility for his own tax and NI, fortunately it did not cause us any trouble, however it has now made me think that we should get all subcontractors to sign a document stating they are responsible for this - Does anyone have a template letter of contract that I could use.

Many Thanks in advance

Julie

 

[elaine@cheapaccounting]

I would recommend that you get a subcontractor agreement in place with all your suppliers.

You can get one at some where like Click docs or Simple Docs or try the legal section

However do bear in mind that just because you think they are self employed they may not be. Here is the view from HMRC:

http://www.hmrc.gov.uk/paye/employees/start-leave/new-employee.htm#2

 

[julieanne4]

Hi Elaine
Thanks for the info, Surely as we only provide occasional work to these people they would be classed as a subcontractor - All we really want is for them to sign a letter acknowledging that we are in no way responsible for paying their tax and NI. I know one of them has definately left a PAYE job and registered as self employed. Im guessing we dont want to refer them them as self employed but as a subcontractor. I will certainly check out the websites you gave me.

Thanks

Julie

 

[elaine@cheapaccounting]

Julie - 'surely' will be a word not in HMRC vocab!

It is not me you have to convince.

Once you have checked out the HMRC link you can build you argument (if challenged) round the facts there and your own situation.

Bear in mind that if they are a subcontractor then they have to be self employed or have a limited company. How else would they declare their income!

 

[julieanne4]

Hi Elaine

This is the bit that tells me quite clearly that they are all self employed, so I dont think we would have a problem there.

In most cases, employment status is straightforward. As a general rule, a worker is:

• employed if they work for you and don't have the risks of running a business
• self-employed if they're in business on their own account and are responsible for the success or failure of their business

The sections below contain a series of further pointers that will help you determine a worker's employment status. And you can also use HMRC's online Employment Status Indicator tool - see 'Asking HMRC for a decision' below.

Can I ask your opinion on the text below:

I am writing to confirm that the (our company name) would like you to undertake future courier work as a subcontractor.

DESCRIPTION OF THE WORK
Collection and deliveries of goods, as advised by us
TERMS OF PAYMENT
You will be paid a fee for each individual job. The fee paid will depend on the distance and complexity of each job.

As you will be paid on a price per job basis you are responsible for your own Tax and National Insurance contributions. You will wish to note that the we, (company name) will not deduct Income Tax or National Insurance.

Please note that on completion of each week you must submit an invoice to the undersigned in order to be paid for the work. Your Invoice should clearly give details of the work undertaken. We endeavour to pay invoices within 21 days from date of invoice, please note you will not receive payment for any work carried out that has not been invoiced.


INDEPENDENT SUBCONTRACTOR
You shall during the term of this Contract be an independent subcontractor with respect to your work and nothing in this contract shall be construed as creating at any time the relationship of employer and employee between (company name) and yourself. You shall not at any time hold yourself out to be the employee of (company name) and shall not be entitled to any of the benefits provided by us..


DATA PROTECTION
You should not disclose any data regarding pricing of jobs. All documents pertaining to the work should be locked away when not in use and returned, along with your invoice, on completion of the work.

If you accept this offer, will you please acknowledge your acceptance by signing and returning the attached letter.


Yours sincerely




Peter Collins
Company Director

 

[Mpg]

Hiya,

I have a blank "sub-contrctaors contract for services" that I can email if you PM your email address.

I have a courier company and I use self employed drivers.

One of the main pointers towards being self employed appears to revolve around the main tools for the job "being their vehicle" who provides it.

Use this link: http://www.hmrc.gov.uk/calcs/esi.htm

HTH

 

[elaine@cheapaccounting]

As I said I would get a subcontractor agreement - there is a lot more in one of those than in your letter and I would recommend getting one in place.

Only my view though but it is what I would do and have done myself in the past.

 

[David Griffiths]

It's not clear if these subcontractors have their own vehicles or not. If they do, there is no problem with paying them as subcontractors.

If you are trying to say that labour only drivers using your vehicles are self employed then you are going to have an argument with HMRC on an inspection. No doubt about that.

 

[julieanne4]

Hi David

They all have their own vehicles and companies which are completely independant from ours

 

[MrPAYE]

Just a general point on this, which crops up a lot.

Having a clause in a contract that pushes responsibility for tax/NI on to the worker is not worth the paper it is written on if HMRC come along and rule that worker is an employee for tax/NI purposes - all unpaid amounts would be recovered from the employer. Clearly, if self employment can be easily argued then it is a mute point but I see so many businesses think they have got rid of any PAYE responsibility by inserting such a clause.

Best action if employment status is touch and go is to have an indemnity in place which enables the employer to recover any amounts paid over to HMRC from the worker. Even then this isn't foolproof as the worker may be long gone by the time HMRC uncovers the problem.

May not be directly relevent for Julie just now but thought it would be worth mentioning for readers of the post nonetheless.