Any experts regarding contractors?

Lifeisbutadream

My OH and I run a small Joinery/Building business.

We use several contractors to do Electrcial, Plumbing, Joinery etc. depending on how busy we are or what work needs doing.

All of the contractors have their own businesses and we use several of each trade (obviously we use the ones that can do the work when we needs it)

We have got very busy lately and one of the joiners has been doing loads more work for us than usual - he is almost working for us full time.

Now I know that HMRC have an issue with companies using contractors, but what do they actually expect from us in this situation? the lad doesnt want a 'contract' - at the moment he gets a % of our profit of the jobs he works on, which he is happy with.

Anyone have any advice?

Savvy_Sue

There is on the HMRC website a questionnaire you can go through which will hopefully put your fears to rest - does he have to do the work personally or could he send someone else to do it, for example?

Lifeisbutadream

Savvy_Sue wrote: »

There is on the HMRC website a questionnaire you can go through which will hopefully put your fears to rest - does he have to do the work personally or could he send someone else to do it, for example?

Bit of both really - we have been through all the checks before but I think that he may now be classed as 'Employed' but I dont know what HMRC expect me to do in this situation...

The_Mighty_Gusset

The work-around is to only take on contractors via an agency.
That way they are technically employed by the agency and not you - however that is going to cost you more.
The alternative is simply not to employ anyone on the same job for more than 13 weeks.
Or ensure that your contractors are not working exclusively for you

If HMRC decide that someone is now employed by you then you are going to have to pay employers NI and you are going to have to sort out his PAYE and employees NI, you're going to have to pay sickness and holiday pay
And so on and so forth.

Lifeisbutadream

The_Mighty_Gusset wrote: »

The work-around is to only take on contractors via an agency.
That way they are technically employed by the agency and not you - however that is going to cost you more.
The alternative is simply not to employ anyone on the same job for more than 13 weeks.
Or ensure that your contractors are not working exclusively for you

If HMRC decide that someone is now employed by you then you are going to have to pay employers NI and you are going to have to sort out his PAYE and employees NI, you're going to have to pay sickness and holiday pay
And so on and so forth.

Ho wdo they enforce it though? and how do they expect you to work it?

The bloke who has done a lot for us lately just does what he likes - I cant make him work if he doesnt want to and I cant stop him from doing other work or going home if he wants to - I wouldnt want him as an Employee!

Looks like we will have to start turning away work so that we dont need him as much.

Savvy_Sue

I would give them a call. I've always found them very helpful, and from what you say he may still be self-employed anyway.

If they say "No, he's employed", then they expect you to register as a new employer (and the new employer's helpline is VERY helpful).

But if he's got the right to say "I'm not coming, I'll send Fred instead" and sometimes does just that, I would hope that he is s/e not your employee!

Rolo_Tomasi

The_Mighty_Gusset wrote: »

The alternative is simply not to employ anyone on the same job for more than 13 weeks.
Or ensure that your contractors are not working exclusively for you.

There is no such thing as a '13 week' rule and it is possible for a contractor to be just working for you but still be self employed (at the moment - this may change if the Revenue get their way). There are a number of factors that the Revenue use to determine the employment status of an individual but the main ones are:

1. Can the contractor make a loss? - They cannot if they get an hourly rate.
2. Do they require supervision? - If they do they are more likely to be employed.
3. Are they skilled? - It is much easier to class a plumber as a self employed contractor than a groundworker.

The first reply gave the best advice. The online tool is called the employment status indicator - see here and this is used by Revenue personnel who would investigate your company

Lifeisbutadream

Savvy_Sue wrote: »

I would give them a call. I've always found them very helpful, and from what you say he may still be self-employed anyway.

If they say "No, he's employed", then they expect you to register as a new employer (and the new employer's helpline is VERY helpful).

But if he's got the right to say "I'm not coming, I'll send Fred instead" and sometimes does just that, I would hope that he is s/e not your employee!

Im already an Employer as we have an Apprentice, so nothing would change there - I am more thinking about how to make this person go from doing what he likes to Employing him. Its all well and good HMRC having their rules to get money from you, but I would love to know how it is supposed to work in theory...:o

Pennywise

Is the joiner providing just himself (i.e. using your tools and materials) or is he providing the full package - i.e. using all his own tools and maybe sourcing his own materials, i.e. wood, hinges, locks, etc etc. In the former case, he's probably an employee, but if the latter, then he's probably fine as being classed self employed even if he works exclusively for you.

Also remember that HMRC determining him to be an employee doesn't make him an employee - it's just HMRC taxing you/him "AS IF" he were an employee. Even if this happens, there is no automatic right for him to have paid holidays etc - tax law is completely separate from employment law.

Lifeisbutadream

Rolo_Tomasi wrote: »

There is no such thing as a '13 week' rule and it is possible for a contractor to be just working for you but still be self employed (at the moment - this may change if the Revenue get their way). There are a number of factors that the Revenue use to determine the employment status of an individual but the main ones are:

1. Can the contractor make a loss? - They cannot if they get an hourly rate.
2. Do they require supervision? - If they do they are more likely to be employed.
3. Are they skilled? - It is much easier to class a plumber as a self employed contractor than a groundworker.

The first reply gave the best advice. The online tool is called the employment status indicator - see here and this is used by Revenue personnel who would investigate your company

Yes he can make a loss - he works on a percentage of our profit on each job that he works on - i.e. if the entire job was making £100 profit and he had worked on the job for 2 hours alonside OH working 2 hours also, the contractor would get £40 - if he had worked alone for 4 hours, he would get £80. If you see what I mean. If anything was wrong he would have to go back and sort it out (or send someone else to sort it out)

He doesnt require supervision and he is a qualified joiner.

Thanks for your help.

Lifeisbutadream

Pennywise wrote: »

Also remember that HMRC determining him to be an employee doesn't make him an employee - it's just HMRC taxing you/him "AS IF" he were an employee. Even if this happens, there is no automatic right for him to have paid holidays etc - tax law is completely separate from employment law.

Thats what I was worrying about - I just dont see how he can be an employee - he just goes off to jobs and does them at the moment, I would have to mnake sure that he was there and what time he left etc.