Self employed documents

Hotel123

Hello,

I work in a Hotel as a Manager, I have a new recruit and they want to go self employed. I explained this is not a problem as long as we see the evidence to back this up for are files.

Can anyone explain what he needs to provide me with?

Many Thanks
Hotel

Hotel123

Thank you for your prompt response, the only reason why I ask is because we have already paid him his first pay cheque but I think he hasnt signed on as self employed yet.
I just wanted to cover are backs, would we get in trouble if he hasnt yet?

Many Thanks
Hotel

PlutoinCapricorn

People can register as self-employed up to 3 months after first doing some work. They should give the date they started.
They will get a letter from HMRC giving a UTR (unique tax reference). They should put this on their invoices as evidence in future, and the first work is covered by this.

Mikeyorks

Hotel123 wrote: »

I explained this is not a problem ...............

Can anyone explain what he needs to provide me with?

How can you tell him it's not a problem ....... if you don't know what is needed / the criteria?

If you tell him how / where / when to do the work. Which he has to do himself? Pay him an agreed amount. And he works primarily for you ..... then it's pretty certain he's employed.

Suggest you read this which sets out the broad distinction. But he can't just tell you ... 'I'm self employed ..... pay me gross'. Otherwise every employee would be at it. HMRC have the casting vote :-

http://www.hmrc.gov.uk/working/work-out-emp-self-emp.htm

This is the basic definition :

In general terms, you are employed if you work for someone and don’t have the risks of running the business. You are self-employed if you are in business for yourself and are responsible for the success or failure of that business.

Hotel123

Thanks for the advice, he did give me a UTR number. Can I call the Inland Revenue to check it is the correct number?

Look forward to your replies.

Many Thanks
Hotel

Mikeyorks

You can try ..... but I doubt they'll go into much detail. You would be better following up via the previous link. You describe him as 'a new recruit' ...... therefore you presume 'employed' from that?

You need to follow that up. If you start paying someone you 'recruited' as self employed .... a PAYE Audit visit could cause you problems.

McKneff

Its the hmrc who decided who can go self employed - he cant just decide himeself so he needs to speak to them first. I doubt it will be allowed. There have been other threads regarding this and its a tough criteria.

PlutoinCapricorn

You could ask for a copy of the letter that shows the UTR: you are entitled to ask for evidence. You would need to see it anyway I think to get the tax office details: I am not sure whether HMRC would reveal information about someone who is not your employee.

Have you really thought about this though? Would you need to give a P45 as the employment has come to an end? I am self employed but I do short term assignments for a variety of clients. Employees can't just announce that they will change to self employment but carry on doing the same work.

Hotel123

Mikeyorks....I apologise for my naivety but how can it mess up my PAYE audit?

Many Thanks and much appreciated,
Hotel

Pennywise

Hotel123 wrote: »

Mikeyorks....I apologise for my naivety but how can it mess up my PAYE audit?

Many Thanks and much appreciated,
Hotel

If HMRC decide he is really an employee, you will get the bill for all the tax and NIC that should have been paid had you properly paid him through the payroll. You need to look at the link given above to satisfy yourself that the work he does for you really comes under HMRC's rules for self employment. Whether this person is self employed, registered, has a tax reference, etc. is completely irrelevant - he could well be self employed for doing work elsewhere but an employee of yours based on the work he does for you. You, as the potential employer faces the consequences of not getting it right and the tax/nic and penalties/interest you will suffer could be huge!

Mikeyorks

Hotel123 wrote: »

.... but how can it mess up my PAYE audit?

Pennywise has basically picked up everything I would have said.
Your industry is notorious for casual employment. So an Audit would, in any event, look carefully at regular payments .... but which do not appear to be recorded against an employee. And regular payments paid gross would almost inevitably cause a status check.

Bear in mind people can be both employed and self employed ... at the same time. The UTR could come, for example, from a bit of Ebay selling.

You need to satisfy yourself of the status of this 'recruit'. They can't self determine it.