Subcontractor or employee??

fluffpot

Hi everyone

Just after a bit of advice or pointing in the right direction!

I'm self employed and a sole trader. Over the next 6 months or so, I will need another pair of hands for 2-3 days a week. I am not needing to take someone on permanently, it's just for a short time. Can I subcontract someone, or do I have to take them on as an employee?

By subcontract I mean they invoice me for the hours they've worked (it will vary a little week to week) and then they sort out all their NI and tax. The payment I make to them forms part of my costs (outgoings). They would have their own insurance. The nature of the work (part time) means that they would probably have another part time job too.

This seems simpler to me! BUT if I cant do this and have to employ them, what are the next steps?

Many thanks for your time

Fluff

steve1980

You can get away with SE sub contractor on this scenario.

McKneff

I would double check on insurance though, the main contractor is responsible for work that a subbie carries out.

Its worth a double check.

fluffpot

Hi folks

Many thanks for the quick replies.
Steve - can you just explain why? Is it because it's only part time/short term?

McNeff - yes good idea I'll get a copy. The person would be working with me (ie not left alone or sent off to another job) so I could supervise pretty closely (I'd want to anyway as the buck stops with me - I'm just a bit like that!)

cavework

The person needs to be registered as self employed and as you say submit invoices for their hourly rate .
They MUST be aware that there is no holiday , sickness etc avaliable and that the work can be terminated at any time without a contract in place, it would help if they had other customers.
part time or short time work does not come into it, you could employ a temp.
Also be aware that if HMRC decides that this person is an employee , you as the employer will be liable for any unpaid employers NI contributions and other benefits avaliable to an employee, such as holiday and sickness.
If you decide to employ them on a short term contract it is pretty straightforward.

Premier_2

Yes, employing them would be quite straightforward. You could do so on a casual basis, allowing you to vary the hours they worked (and hence get paid for)

fluffpot

thanks again for replies

Cavework - The person I have in mind is already registered as self employed and all of the conditions you mention I would make clear. In what case would HMRC decide that they are an employee instead?

Premier - I think for simplicity sake and as it's not a long/regular thing, I'd prefer NOT to employ someone as I think it'll involve more work/paperwork for me to deal with - as long as it's possible to do so of course!

EllaBeagle

Although it would be them sorting out their own national insurance it would be you that would need to deduct tax and pay this over to HMRC.

Not sure what business you do but I did the payroll for a construction company and had to find out whether the subcontractor was gross or 20%. If they were 20% I had to deduct the tax from them and pay this to HMRC every month.

This didn´t apply if they were VAT registered however.

Might be wrong as I´ve been out of this work for a while.

fluffpot

Thanks again. Yes its construction. Looking at HMRC website then I'd have to register as CIS? Even if for only a short time? Do you then stay registered??

EllaBeagle

fluffpot wrote: »

Thanks again. Yes its construction. Looking at HMRC website then I'd have to register as CIS? Even if for only a short time? Do you then stay registered??

As far as I know you would need to register for CIS with HMRC and they will give you a UTR number. The subcontractor will also have a UTR number which when given to you, you will need to contact the CIS helpline to verify it and to find out whether they are gross or 20%. If 20% you will need to deduct this from their invoice and pay this over to HMRC every month (if they will be working for you for a while) and fill in a CIS Return.

Once you are registered, even if you haven´t used a subcontractor, you will need to submit a nil return for the months you haven´t paid a subcontractor if that makes sense.

Hope this helps.