Advice Please

masonsmum

I have just returned from 9 months maternity leave and have returned to my office in a total nightmare. I am an office manager for a small building contractor and work solely in the office, where all other employees are out on site.

The lady who was covering my maternity leave was supposed to be an experienced adminstrator/accounts assistant and I have come back to a serious cashflow issue, no statements or invoices have been sent to our customers, we are on stop with most of our main suppliers, have a 9K HMRC VAt bill not been paid and this is only some of the major issues. When she started working she asked my boss after a few weeks if she could work as self employed as she had her "own little business" so rather than paying her through the books he paid her by monthly invoice.

She has submitted an invoice by email, refuses to come into the office to sit down with me to take a look at the accounts (this is not an issue as I can sort the mess out but I just thought it would have been the thing to do) and still has a key for the office.

Company Director now wants to send her a letter refusing to pay due to the mess the accounts are in as she was not specifically an employee but a contractor - can we do this, and whats the best way to word this?

Thanks in advance for some helpful advice.

SarEl

This is potentially a bigger mess than you think. Unless she was specifically covered by the construction contractors scheme then she couldn't go self-employed and wasn't self-employed! There are specific tests of self-employment and I can see no way in which this situation would pass them. So your employer could have acted unlawfully and incurred liability for tax and NI.

I would suggest that he needs to take appropriate legal/ professional advice on the whole situation rather than digging bigger holes!

Uncertain

SarEl wrote: »

This is potentially a bigger mess than you think. Unless she was specifically covered by the construction contractors scheme then she couldn't go self-employed and wasn't self-employed! There are specific tests of self-employment and I can see no way in which this situation would pass them. So your employer could have acted unlawfully and incurred liability for tax and NI.

I would suggest that he needs to take appropriate legal/ professional advice on the whole situation rather than digging bigger holes!

Yes indeed.

If she was an employee by default then the company can't refuse to pay her for work they claim she messed up. Obviously they could have disciplined her or even dismissed her but that wouldn't have got them out of paying for the time she worked. This is one of the key tests for employment / self employment - who pays to put mistakes right.

Also, if she is switched on, she could argue that she should have received paid holidays and payment in lieu of notice.

The dilemma now is whether to pay her bill and hope the other issues never arise or, as SarEl suggests, take legal advice and sort the mess out properly.

Firefox1975

Too many people out there consider themselves experienced accounts staff when in actual fact they have very little understanding of the bigger picture in accounts. Trained parrot fashion for specific roles. Sounds like she was in over her head but worse THOUGHT that she could submit personal invoices and avoid monthly taxation by going under the HMRC radar.

I would tell her that of course you will settle the invoice but you are in negotiation with HMRC regarding her employment status with your company. Tell her you have given them her name and address etc. and they will probably be in touch shortly to confirm the details of her book keeping business.

its up to you whether or not you do this - but I am guessing she will shut up straight away and probably wont ask you for settlement again.

I would imagine you would be hard pushed to launch a succesful legal battle against her if she is not a fully qualified accountant for what she has done. Let HMRC do it for you instead.

Uncertain

Firefox1975 wrote: »

I would tell her that of course you will settle the invoice but you are in negotiation with HMRC regarding her employment status with your company. Tell her you have given them her name and address etc. and they will probably be in touch shortly to confirm the details of her book keeping business.

its up to you whether or not you do this - but I am guessing she will shut up straight away and probably wont ask you for settlement again.

I don't think that would be a good idea!

As far as HMRC are concerned it is up to the company to make sure that anybody they treat and pay as self employed genuinely is. From the description we have been given it is hard to see that this was anything other than "sham" self employment. HMRC will look to the company for the tax and NI.

Secondly there is no legal requirement for somebody offering a bookkeeping / accountancy service to have any qualifications at all. This would only apply if they were to conduct an audit for a limited company.

SarEl

I agree with Uncertain. On the face of it, whatever happened, the employer is responsible for adhering to the law and didn't. There are all sorts of issues potentially here - holidays, tax, NI....

With the best will in the world, I wouldn't try to sweep this under the carpet - I would probably withhold payment for now with an explanation that her "advice" that she was self-employed has come under question and until this is clarified there are potential tax and NI obligations on both sides which need to be clarified. It is not strictly lawful to do that - but I doubt she's going to be rushing into court, because I would lay bets she isn't paying the tax either!

But I would go by the book - even if it costs the employer a bit - because getting caught not doing so will cost more. And then, in the employers shoes, I think I would resolve to read and memorise the book so that they don't end up employing people wrongly again!

Notmyrealname

SarEl wrote: »

This is potentially a bigger mess than you think. Unless she was specifically covered by the construction contractors scheme then she couldn't go self-employed and wasn't self-employed!

Sorry but if she is self employed already and has other clients then yes she can do this as a self employed position.

Uncertain

Notmyrealname wrote: »

Sorry but if she is self employed already and has other clients then yes she can do this as a self employed position.

Not if she went in there month after month and worked every bit as if she was on the staff! She may be properly self employed for her other clients (if she has any) but that doesn't in itself mean this particular relationship was.

SarEl

Uncertain wrote: »

Not if she went in there month after month and worked every bit as if she was on the staff! She may be properly self employed for her other clients (if she has any) but that doesn't in itself mean this particular relationship was.

Exactly. Someone can be both employed and self-employed at the same time. If you are expected to attend your employers workplace, if you have set hours, if you cannot subcontract the work, or choose not to do the work at all - these are all test of employment. That does not mean you can't have some self-emplyment on the side too. But the etsts for employment are very clear, and do not change if you happen to also have some self-emeployed work.

isplumm

Uncertain wrote: »

Not if she went in there month after month and worked every bit as if she was on the staff! She may be properly self employed for her other clients (if she has any) but that doesn't in itself mean this particular relationship was.

Hi,

As an IT contractor I have my own limited company & tend to work for only 1 client at a time ....

so what is the difference between what I do (& numerous other IT contractors do) & the person mentioned by the OP?

Thanks Mark

Sambucus_Nigra

SarEl wrote: »

Exactly. Someone can be both employed and self-employed at the same time. If you are expected to attend your employers workplace, if you have set hours, if you cannot subcontract the work, or choose not to do the work at all - these are all test of employment. That does not mean you can't have some self-emplyment on the side too. But the etsts for employment are very clear, and do not change if you happen to also have some self-emeployed work.

She evidently did choose not to do the work! She is just choosing to invoice for work not done.