tax question - self employed or PAYE

thetoothfairy

I currently work part-time as a paid employee (PAYE). I'm about to take on a new job for a public sector body as a consultant - and on a self-employed basis - it's a day a week. The contract clearly states that I am not an employee of the council, or member, or associate etc....

My worry is though, that I need to declare to the tax office that I am self-employed...but looking on the HMRC website, it's not entirely clear if I am or not - the contract I have from this new job says I report to a manager, I'm paid monthly, I work from their office etc......will the HMRC think that this is too formal to be a self-employed status? How can I find this out?

If I did declare myself as self-employed....what would happen if the tax people suddenly decided I should actually be 'employed' ie PAYE? Would I be in trouble, or is the onus on the employer to get this right in the first place?

SeduLOUs

HMRC don't actually care as long as the tax gets paid. Nobody will come along and declare you as employed unless you get into a dispute with the council. If this happens a court can decide if you are 'employed' or not.

The problem might occur if you go and get pregnant or go off on long term sick - you could argue the fact that you are actually an employee in order to get the rights that go alongside employed status. Other rights you are missing out on are holiday pay and stuff around dismissals - on a self employed basis they can let you go whenever they want for no reason, although it's all irrelevant if the contract is only for four months.

If you're happy to work on that basis then register for self assessment and put away approximately 20% of your council income in time for when you need to pay your tax. If you're not happy to work without holiday/sick pay etc etc then you need to discuss this with the council and decide whether the job is worth your while. Bear in mind you should probably be looking for a higher hourly rate than your 'employed' job to factor in all of the holidays etc that you won't be getting. In a public sector job, the holidays and other benefits that you are missing out on could be fairly substantial.

thetoothfairy

thanks - that's really helpful :-)

colino

You are being offered a piece of work with no guarantee of a future, taking up only 1/7th of your available working days per week. Seems pretty clear it is self-employed and you should be looking to fill the rest of your week.
Be careful with public sector consultancies though, while you are given work because a) they don't have the in-house skill, b) they require a short-term resource gap filled or c) they have a separate piece of work in addition to their normal work, wait for the first sniff of budget cuts, your phone will ring straight away with the, "thanks, but your services are no longer required" conversation.
Make hay while the sun shines, but you have no continuity, pension or support with customers like this.