Subcontractor or Employee?

[14A]

Hello,

If you subcontract to a company, I believe certain factors can actually mean they would be classed as an employee. I'm sure I read that a subcontractor cannot work for just the one company only each year. After I post this topic I shall pop on to the gov website but in the mean time I thought I would ask:

If I wanted to create a job for subcontractors on a permanent/nearly permanent basis - How would I go about doing it?

Would I give them work for 11months then insist they spend 1 month working elsewhere before returning?

 

[alanc]

It sounds you're referring to IR35 (do a Google search). This area is a bit of a minefield, but the main onus is on the subcontractors and how they pay themselves.

 

[MrPAYE]

There should be a sticky for this as it comes up so regular on this forum

Some crucial points to note:

1) IR35 is ONLY relevant if the worker is supplying his services through a Ltd company, e.g. Joe Bloggs Ltd not Joe Bloggs himself. If IR35 is in point, the responsibility to get the tax/NI right is the Ltd company's, i.e. not the paying organisation

2) If IR35 is not in point, all the risks rest with the paying organisation. If the worker is paid incorrectly as self employed, the paying organisation could face paying back tax, NI (employer and employee), interest and penalties to HMRC

3) It is usually very very difficult to persuade HMRC that a permanent (or "nearly permanent" position in your words) is one of self employment even if there is a one month or whatever break. Very high risk indeed if you consider this strategy.

I think you need to do some reading on employment status and seek proper advice if necessary otherwise it could cost your business lots of cash if you get it wrong.... you have been warned

 

[BusinessM8]

Hello,

If you subcontract to a company, I believe certain factors can actually mean they would be classed as an employee. I'm sure I read that a subcontractor cannot work for just the one company only each year. After I post this topic I shall pop on to the gov website but in the mean time I thought I would ask:

If I wanted to create a job for subcontractors on a permanent/nearly permanent basis - How would I go about doing it?

Would I give them work for 11months then insist they spend 1 month working elsewhere before returning?

If I read this correctly you're asking about hiring one or more subcontractors.

If you want a stress free situation (and can get away with it in terms of the quantity and quality of the work you are offering) the best option is to insist that they work as a sub-contracting limited company. This may seem daunting to them but it needn't be so, get 'proper advice' (we can help if, you wish, for a small fee and can even enable you to 'provide the limited company' - that needn't be expensive either and it's an area I've been involved in since 1986). The reason being that you have absolutely no liability to do more than pay them for specified, contracted and completed work. Your research into IR35 should be useful here!

Employing self-employed people can work but not if you are the primary source of income - when (and it will be when) HMRC notice they're almost certainly going to insist that they are employees and hit you with back PAYE and penalties.

Hope this helps?

All the best

Tim

 

[Simply Business]

Hello 14a,

I work for a business insurer and I often speak to new customers who are not 100% sure if they need to have employers liability insurance or not - so you are not on your own. As per the previous posts there are a number of different criteria that can define someone as being your employee. One such criteria is if you tell them where, when or how to work they can be defined as employee's.

If you have any question or queries around business insurance or employers liability please feel free to get in touch via
http://www.simplybusiness.co.uk/social/online-customer-support
Kind Regards

Tim

 

[MyAccountantOnline]

Hello,

If you subcontract to a company, I believe certain factors can actually mean they would be classed as an employee. I'm sure I read that a subcontractor cannot work for just the one company only each year. After I post this topic I shall pop on to the gov website but in the mean time I thought I would ask:

If I wanted to create a job for subcontractors on a permanent/nearly permanent basis - How would I go about doing it?

Would I give them work for 11months then insist they spend 1 month working elsewhere before returning?

What you've read isnt always true - employment status can be a minefield be really careful.

My advice is to get proper paid for professional advice before you do anything, it could save you a huge amount in the longer term.

In the meantime you may be interested to read here - http://www.hmrc.gov.uk/paye/employees/start-leave/status.htm