How do you do PAYE and National Insurance?

mirabelleplum

I've been working on a self employed basis for a company for about 2 years doing secretarial and computer work, and now that their workload has increased, they have become the only company I am offering this service to.
Bearing in mind that the situation was now at the point at which they were for all intents and purposes my only work, we decided that I should become employed by their company. (I will be the only employee)
However, I have been asked to do my own paperwork for this, ie sort out tax, NI etc. every month. I currently charge £1002 a month for my services, and they would pay my tax and NI on top of this. (so I feel it's the least I can do to learn how to sort the tax etc out as they have effectively given me a payrise)
How simple is it? How do I go about everything?
(And I'm really sorry my first post is me asking a question rather than trying to help someone out)

Raksha

Ask your local tax office for advice, they will show you how to fill out everything. I used to do this for my OH when he was an IT consultant, it's very easy. The company will have to pay an additional Employers contribution for the NI element.

fengirl_2

This is a bit out of order. Its the employer's responsibility to deduct tax and NIC, not put the burden on you - its part of the responsibility of being an employer!

I am concerned about how this change of status has come about. You cannot suddenly be an employee just because this company is your only client. If the relationship between you (regardless of who else you work for) has not changed, then there is no reason why you should go on to PAYE.

I suggest your employer has a word with the status inspector at the local tax office (or takes advice from his accountant).

mirabelleplum

Hi,
How the situation has come about is that I was already self employed and started doing secretarial work for a particular company. It gradually came about that they wanted more and more of my time, to the detriment of the other work I was able to do, and this has finally reached a stage over the past few months where they have become the only company whose work I do.
I remember when I first started, speaking to a friend who was an accountant who told me that I had to make sure I was genuinely self employed, ie that I drew earnings from several places, otherwise I could be classed as employed by a company, even though I and the company regarded me as self employed.
Well, as I can no longer draw work from anywhere else, we both want to avoid the situation where I am perceived to be employed, ie we are trying to go about it the correct way.
As my job as their secretary/computer person/pa/office manager involves doing the basic books, the VAT etc, it seems to be obvious that I would do that too. I'm just not sure how.

fengirl_2

Working for just one client is not the only test of self employment. Other questions to ask are:
Can I come and go as I wish?
Can I send someone else to do the work?
Can I make a loss
Do I have to rectify mistakes in my own ytime?
If the answer is no to all of these, you are probably an employee. I am concerned that you may have been an employee all along!

mirabelleplum

Hi fengirl,
Thank you for your reply.
Yes, certainly for the past few months I've been able to answer no to all these questions apart from the last one, (I do rectify mistakes in my own time) which is what has been concerning me. It's been a difficult situation as the company is owned by relatives, and I've had to make them see that because of all the reasons above I would be classed as employed. (I don't want any hassle with HMRC) I now find it impossible to take on any extra work as they want me when they want me, and (as I've said) they're close relatives and I am uncomfortable saying no.
Over the past few months they have expected me to be more and more at their beck and call, and so this situation has developed. It is set to get worse as they move into their busy time, so I am trying to get everything sorted out now.
Can you perhaps clarify what the situation all round would be if HMRC did class me as being employed by this company prior to this?
I know I ought to be better informed hence my asking.

John_Pierpoint

She is a one man band working for another one man band (or small partnership) Surely all the OP has got to demonstrate is that she she was able to organise her own diary in the days when she had more than one client? In the present climate the government should be glad that there are self reliant "entrepreneurs", who won't be claiming redundancy money off the state and going promptly on the dole, when one of their customers goes belly up?

Nothing wrong with being employed to do the payroll of one.
(Of course it is an unproductive job that adds nothing to the wealth of this country).

fengirl_2

If HMRC did class you as being an employee before this, your employer would be liable to pay the tax and NIC he should have deducted, even if you have paid your own tax.

Part of your job may well be to operate PAYE on your own salary, but its the employers responsibility to register and make sure its done properly.