Company refusing to pay me as "Self Employed"

wattc

I have done some IT work for a company recently.

When I finished, I said I would invoice them for the work.

They asked if I was a limited company. I said no, I was self employed.

They said they could only pay me if I was:
- a Limited Company
- or if they put me on their payroll as an employee.

I don't see why they can't just let me invoice them directly as a Self Employed individual??

I invoice many other companies as self-employed - no need for a ltd company - and it's no trouble for them.

Is this illegal for them to refuse to pay me as self-employed? Can I challenge them?

Any guidance appreciated here.

P.S. It was for 3 days work.

agrinnall

The likely explanation is that if they pay you the full invoice amount as a self employed worker they may find that HMRC later treat your work as employment, meaning they would have to pay tax and NI. However, it seems a bit unlikely to ever happen if you've only done 3 days work and you won't be doing any more for them. I'm not sure what you can do to convince them, but hopefully somebody who knows more about the subject will be along to offer some tips to persuade them.

Uncertain

wattc wrote: »

I have done some IT work for a company recently.

When I finished, I said I would invoice them for the work.

They asked if I was a limited company. I said no, I was self employed.

They said they could only pay me if I was:
- a Limited Company
- or if they put me on their payroll as an employee.

I don't see why they can't just let me invoice them directly as a Self Employed individual??

I invoice many other companies as self-employed - no need for a ltd company - and it's no trouble for them.

Is this illegal for them to refuse to pay me as self-employed? Can I challenge them?

Any guidance appreciated here.

P.S. It was for 3 days work.

This is becoming more and more common.

It is a bit of a knee jerk over reaction because they could be held liable for the tax and NI if you failed to pay it and HMRC felt you were working in a way that an employed person would normally work (even just for three days)!

In the end, from your point of view, it will come to the same thing and you will just have to enter the amount on your self assessment form as income taxed at source so you won't pay twice.

Some companies will accept a letter from your accountant to say that you are a "proper" business and that he deals with your tax affairs.

You may be able to get paid in full by this firm just this once if you make enough fuss and and say this is not what was agreed but you are then most unlikely to get any further work from them!

LittleVoice

For the future - always provide your terms of business before beginning work. These to include that they pay you within 30 days (or whatever) of the presentation of your invoice.

Hammyman

Send them a reminder invoice giving them 2 weeks to pay. Then send them a statement of account with payment due within 7 days and then if they don't pay file a county court claim online.

ali-t

OP, I had similar when doing work for the NHS but we agreed that if I put a statement on the invoice saying words to the effect of full and final payment with no further liability this would cover it.

scheming_gypsy

LittleVoice wrote: »

For the future - always provide your terms of business before beginning work. These to include that they pay you within 30 days (or whatever) of the presentation of your invoice.

or just refer to the terms of business that were agreed before starting the work. They'll either say they'll only pay Ltd companies, or there'll be no mention of it.
If there's no mention, refer to Hammyman's post.

Uncertain

Hammyman wrote: »

Send them a reminder invoice giving them 2 weeks to pay. Then send them a statement of account with payment due within 7 days and then if they don't pay file a county court claim online.

Which is fine if you don't want to work for them again!

PlutoinCapricorn

The terms really should have been agreed on both sides in advance.

I have seen this problem before, and it is usually caused by people who do not really understand the rules: rather than treat people as individual cases, they insist on the limited company rule for everyone. In this case it really is overkill.

If HMRC did an audit and found regular payments to an individual over a period of time, they might wonder why the individual was not on the payroll, but irregular or one-off payments to sole traders are perfectly legal - otherwise there would not be any!

I would try to explain the position to them, and try to get them to accept your invoice and pay it gross.