Self Employed employing self employed

willsy68

Hi,

Wonder if somebody could help me here, I have just taken over the management of a public house and only earn on a percentage of gross take from the bar. I have to pay any staff out of what I earn and although I have registered as a sole trader, I really do not want to go down the lines of PAYE when it comes to employing staff. I have been led to believe that I can pay any staff cash in hand (gross), so long as they sign for their money and declare that they too are self employed. If this is the case, my question is what wording would I need on a form for them to sign that would exonorate me from any tax or NI responsibilities towards them?

Look forward to some feedback.


Willsy68 :beer:

McKneff

Whoever told you that is talking total rubbish.

Its the HMRC who decide who is selft employed and who is not, not an employer or an employee and i dont think for a moment the HMRC would sanction this.

Being self employed isnt as simple as you seem to think it is I'm afraid.
Just signing a piece of paper would not exonerate you.
This used to happen and people were just signing as Donald Duck, Mickey Mouse etc. So there are a lot more self employed tax rules now.


Best thing to do is give them a ring and get it from the horses mouth so to speak then at least you know for sure.

PlutoinCapricorn

It seems to be a sign of the recession: other posters have reported that their employers want them to start working on a self employed basis. This saves the employer from dealing with admin and payroll, and also from paying Employer's National Insurance, sick pay, holiday pay, redundancy money etc.

There is nothing wrong with taking on freelance staff, provided that the relationship is obviously not one of employer and employee and provided that the person taken on is a real self-employed person who is happy not to get paid holidays. However, if the workers make a regular committment and HMRC can see that they get paid regularly, the employer may need to pay all the outstanding PAYE etc. money. If you want to control the people who work for you and set their hours etc. as opposed to negotiating assignments, then running PAYE is the price.

Savvy_Sue

If your staff were self-employed, then they could do the work when they felt like it rather than when you needed them. If they didn't feel like turning up one day, they could send someone else to do their work.

Does this still sound like a good plan?

pelirocco

HMRC have very strict guidelines on who they consider is self employed , e.g they dont work for one company and can show they pick and choose the work , provide their own tools etc .http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_4015975

xnatalie81x

Sorry to hijack but i am really confused

i teach swimming for a club. The hours are the same every week bar the holidays. All equipment is provided apart from swim costumes. They have just asked us to sign 'terms of agreement' with things like arriving early to set up, only submitting timesheets termly or monthly with permission an some other stuff. I am not impressed to have what seems to be a contract as i am self-employed apparently and i feel they are wanting employees without having to provide any benefits such as freedom from unfair dismissal, sick pay etc

What do you think??

PlutoinCapricorn

I don't knowing anything about what is normal for people involved with swimming, but my first impression is that you are right: this sounds like a job in essence to me.

They are treating you exactly like an employee, without giving you the associated benefits. I wonder whether they aware of HMRC's rules about this. I take it that they are paying you gross, without any deductions?

xnatalie81x

Yeah - i submit a timesheet and they send me a letter and a cheque. I wouldn't mind until this 'contract' emerged! It has bugged me a bit! I may give HMRC a call and see what they think but i am actually one of 2/8 teachers who declares as self-employed legitimately. The others are open about taking cash in hand and not declaring......... and if i start asking questions people are going to be getting into trouble!

leveller2911

pelirocco wrote: »

HMRC have very strict guidelines on who they consider is self employed , e.g they dont work for one company and can show they pick and choose the work , provide their own tools etc .http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_4015975

Not strictly true I'm afraid.

I have been self employed for 24 years, the last 11 yrs as a sole trader. Before that I sub-contracted as a carpenter/joiner for a building company.Worked for them for 10 years via sc60 system.

For years there was rumblings about HMRC seeing us as employees and as such should be "Employed" Via PAYE. The fact that we supplied our own tools, didn't get any Holiday pay, sent home early in bad weather and laid off with no notice seemed to mean nothing.So the company TOLD us we either go "employed" or we will only work for them for no more than 6 months of the year.

Now the fact is that a tree surgeon can work on a sub contact basis for 365 days a year for a single company or someone working in a pine furniture factory can be self employed working for the same employer and NOT supplying any tools whatsoever means the system is flawed and from first hand experience I can say HMRC have very inconsistant rules...So workers were made to go "employed" or leave.50% left......

It sems that they only have strict rules for certain industries and lastly I would say lots of workers in the construction industry lost their jobs over these pathetic rules.

Everything I have written above is FACTUAL , 1st hand experience and NOT hearsay.........Good luck OP

DCodd

leveller2911 wrote: »

Not strictly true I'm afraid.

I have been self employed for 24 years, the last 11 yrs as a sole trader. Before that I sub-contracted as a carpenter/joiner for a building company.Worked for them for 10 years via sc60 system.

For years there was rumblings about HMRC seeing us as employees and as such should be "Employed" Via PAYE. The fact that we supplied our own tools, didn't get any Holiday pay, sent home early in bad weather and laid off with no notice seemed to mean nothing.So the company TOLD us we either go "employed" or we will only work for them for no more than 6 months of the year.

Now the fact is that a tree surgeon can work on a sub contact basis for 365 days a year for a single company or someone working in a pine furniture factory can be self employed working for the same employer and NOT supplying any tools whatsoever means the system is flawed and from first hand experience I can say HMRC have very inconsistant rules...So workers were made to go "employed" or leave.50% left......

It sems that they only have strict rules for certain industries and lastly I would say lots of workers in the construction industry lost their jobs over these pathetic rules.

Everything I have written above is FACTUAL , 1st hand experience and NOT hearsay.........Good luck OP

The Finance Act 2006 and in the case of the Construction Industry, the New CIS have changed this now. It is getting very difficult to prove self employment. It mainly is concerned with, at the moment, the terms of the sub-contract documents, the ability to show risk of financial loss and independant control of your own labour.

leveller2911

DCodd wrote: »

The Finance Act 2006 and in the case of the Construction Industry, the New CIS have changed this now. It is getting very difficult to prove self employment. It mainly is concerned with, at the moment, the terms of the sub-contract documents, the ability to show risk of financial loss and independant control of your own labour.

If you can be laid off work at the drop of a hat, sent home without pay if the weather is bad, don't get holiday pay or redundancy then to most people that IS "risk of financial loss".

The problem is the HMRC were/are messsing with peoples jobs.It perversely seems to be the Construction industry they concentrate their efforts on.Like I said in my previous post Forestry and Agriculture seem to "escape" regulating.

How is it right that a tree surgoen working for the same "employer" and only supplying labour has got away with working as "self employed" for years, BUT a carpenter working for the one "employer" ,having his own van and tools is seen as being "Employed"?.

Did the HMRC also bring in a "CIS" type system for the Forestry and Agricutlture industries?.

The CIS system was one of many systems HMRC have brought in over the decades in response to the "Irish lump" in the construction industry in the 70,s.They seem intent on punishing the industry ever since.

personally I made the decision 11 yrs ago to concentrate on setting up a small joinery workshop and glad I did.