being employed and self employed tax rules

PSHMW2011

Please can anybody help?

I have been hiring a couple of drivers on a very casual basis (1 or 2 days per month, to cover holidays, Saturdays or any busy periods), no fixed days.

Both drivers are employed full time by another company and pay their taxes via PAYE, due to this I was advised by my Accountants to take these on as self employed, to which I did.

Both drivers have cleared the work with their main employer, to avoid any conflicts with being employed, to which both have signed documents to cover any tax complications.

They both also registered as self employed and complete annual self assessments, and pay their additional tax via adjusted tax codes, which is collected via their main employers.

Unfortunately I have had a tax Investigation, my accountant has been involved in the investigation. During the investigations my accountants failed to mention that it was their advice that I employed the drivers on self employed basis, they also failed to mention that both drivers are completing self assessments.

Because of this I have now ended up with a tax bill having to pay their Income tax along with both employee and employer national insurance.

Both drivers and another witness remember the meeting and discussion with the accountants regarding how to deal with their employment; both drivers also have copies of their annual tax returns.

Therefore personal tax and NI has now been paid twice. Please can anybody help?

Uncertain

This shows the dangers of treating staff as self employed I'm afraid.

You may well have a claim against your accountants for any losses you have suffered as a result of their poor advice (obviously assuming you can prove what they advised and that you followed it).

The "employees" who have been taxed twice will be able to claim this back from HMRC.

easy

The tax authorities have their own guidance on whether someone is self-employed, or employed. It is irrelevant that your 2 drivers completed self-assessment and paid their own tax.

The basic guide to those rules is her http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_4015975

If your drivers were using their own vehicles, deciding for themselves when to do the work you asked of them, and would have been free to send someone else to drive for you on their behalf, then they were self employed, and you should appeal against HMRCs decision

I'm guessing that isn't the case however.

Hammyman

PSHMW2011 wrote: »

Because of this I have now ended up with a tax bill having to pay their Income tax along with both employee and employer national insurance.

And quite rightly too. Their job did not meet the criteria of being self employed in any way, shape or form. You can't just decide it is, HMRC do. The fact they completed self assessments is irrelevant.

Also remember now that as HMRC has decided the status of their employment, you also have to pay them holiday pay too.

InsideInsurance

I am not sure if the accountant had confessed to it being their advice that HMRC would have acted any differently?

If you want to allege your accountants gave you bad advice then you take the matter up with them directly and they will almost certainly have Professional Indemnity insurance to defend these sorts of issues and pay compensation where compensation is due.