Self Employment status

thedokta

Strictly not a moneysaving thread but I'm hoping that someone might be able to help as there appears to be quite a few people that know a lot about tax.

I am registered as being selfemployed, and have been for the past year and a half. I work 9-5, 5days a week for one company which is my only source of income. I receive no holiday pay, sick pay or paid bank holidays and pay my own tax via self assessment. Yesterday I was called into my boss' office and told the following.

The Inland Revenue are looking closely at the self employment status of individuals that work for only one employer and that I could find myself in trouble. I was advised to either get my accountant to write a letter stating that he/she was happy to say that I was self employed, or spend £150 and become a company. I was told that the onus is on me to prove to the Inland Revenue that I am self employed.

I am wondering if anyone knows whether this is true and that i could get into trouble or whether it is my employers responsibility to prove that I'm not employed by him.
I don't wish to become a company at my own expense or pay for an accountant to write me this letter if it is not necessary.

Is my employer doing this to cover himself as he could get into trouble?

Hope someone might be able to help.

Thedokta (not a real doctor by the way!)

WHA

It is not you, but your "employer" that would be given the tax and NIC bill if HMRC decided you were an employee and not self employed. That is why your employer is obviously worrying! A letter from your accountant is completely useless and worthless - it is HMRC that decide on your employment status and that decision will be based on an in-depth consideration of the working relationship between yourself and your employer. I think your employer is being given dodgy advice. What is needed is for you to work with your employer to produce a contract of services that clearly proves you are self employed and that you put working practices in place accordingly. Why no suggest going halves with them to have a proper contract drawn up by a specialist lawyer. After all, you are both in a dodgy position - your employer could be landed with a huge tax bill and there is the potential that your employer could just terminate your services if you don't do anything.

thedokta

WHA, thanks for your reply. That's kind of what I suspected. My employer has a company that totals about 20 people that are here on a regular basis ie 5 days a week, and only 3/4 people that are actually employed.

May I ask how you know this information?

Thanks

amf

WHA wrote: »

It is not you, but your "employer" that would be given the tax and NIC bill if HMRC decided you were an employee and not self employed. That is why your employer is obviously worrying! A letter from your accountant is completely useless and worthless - it is HMRC that decide on your employment status and that decision will be based on an in-depth consideration of the working relationship between yourself and your employer. I think your employer is being given dodgy advice. What is needed is for you to work with your employer to produce a contract of services that clearly proves you are self employed and that you put working practices in place accordingly. Why no suggest going halves with them to have a proper contract drawn up by a specialist lawyer. After all, you are both in a dodgy position - your employer could be landed with a huge tax bill and there is the potential that your employer could just terminate your services if you don't do anything.

Absolutely first rate advice. I would be in no doubt that your "employer" is aware of his potential liabilities.

One point WHA made that I'd like to emphasise is that the working arrangements can always be altered. It's important though that the terms and conditions in any written contract be reflected in practice. If they are not, it is the actual working arrangements which matter.

thedokta

Thanks for your message, do you know WHA's advice to be true, if so how?
I'm not questioning it I just want to be sure that what he/she is saying is correct.

amf

thedokta wrote: »

Thanks for your message, do you know WHA's advice to be true, if so how?
I'm not questioning it I just want to be sure that what he/she is saying is correct.

I have no personal knowledge of WHA and have already commented on the excellence of his advice.

Speaking only for myself.....I know of these matters because of my familiarity with them. BTW.....it's not normal on here to ask advisors to demonstrate their bona fides! My advice....if the advice looks good, take it. Otherwise, seek it elsewhere.

thedokta

I fully appreciate the advice being given. And I have sought advice elsewhere. I understand that you can't vouch for someone else's advice I was just wondering if you knew whether it was definitely right or not. I'm not asking WHA or yourself to prove your credentials.

Thanks to you both for your input.