Urgent help needed with some Employment Law - PAYE or Self Employed

LP110683

I am working for an employer at present and was paid on a PAYE basis for 4 years. I was then offered partnership back in February and told that my pay would change. They switched this over in March (with no written confirmation) and now I get a monthly lump sum, which includes my NI and income tax payments. I have asked for a payslip and been told I essentially dont have one as I becoming a partner. However, this has not happened yet and I have not signed anything whatsoever. I am wondering if this technically makes me self employed? I have been told I will need to sort my own taxes out. 

I am looking to hand my notice in and my PAYE notice was 4 months. However, if self employed, is this still valid? Any help would be great.

TELLIT01

You need to find out whether or not you are officially a partner in the business.  Request the paperwork to confirm the status one way or the other.  It's hard to see how you can be a partner if you haven't been given any information on what that entails, or signed anything.

LP110683

Thanks for your quick reply. 

Nothing has been done yet. Apparently the partnership paperwork is still with the lawyers, so I have not seen or signed anything. 

General_Grant

So if you leave before getting that sorted, the payments made to you "gross" according to them should actually be considered as nett of tax and NI.  The tax and NI should have been paid over to HMRC by the employer and they would still be responsible for those payments.

LP110683

Thanks for your reply mate. But if they have told me that I need to sort my own tax out and I have been getting the exact figure of my wage before taxes are deducted, does that mean I need to give the money back? Very confusing situation.

Thrugelmir

Speak to an accountant . You are liable for your own tax and national insurance. 

General_Grant

LP110683 said:

Thanks for your reply mate. But if they have told me that I need to sort my own tax out and I have been getting the exact figure of my wage before taxes are deducted, does that mean I need to give the money back? Very confusing situation.

Just because an employer tells you have to sort out your own tax, doesn't absolve them of their legal duties as an employer to deduct tax and NI.  So whatever they pay you is considered as nett of those deductions.  Unless your work actually changed in nature and opportunitiy to do much more as you wished then I don't think you would be considered as self-employed.

Also, of course, they should have been paying employeRs NI as well as remitting your employeEs NI.  It seems they were hoping to make a saving on NI and the only benefit to you for that would really have been a share in their profits, if the partnership were to make a profit which would be shared with you.  

So you would not need to hand any money back - it's their responsibility to pay HMRC.  You could wait until you are no longer an employee and then contact HMRC to check your account and then ask why your tax and NI has not been passed on to them.

What you actually do depends on how you feel about it and your relationship with this organisation which was trying to avoid its legal obligations in relation to payments to HMRC.

Did you take any holiday (including bank holidays) during the current holiday year?

I'm presuming you did not submit invoices to cover the payments made to you and they simply sent the funds direct into your bank account, the same one they had been using previously.

LP110683

Hi. No invoices submitted, and I have taken a few holiday dates here and there. I dont feel bad about the organisation, I am just pre empting some aggression about me leaving and want to make sure they don't try to wrap me up in all sorts of logistical mess. I believe you are correct in the savings and the share of profits. I have been told that the super profit at the end of the year, as an LLP partner would be paid. Obviously I have seen no contract or signed anything. I have just been told what is going on. 

The tax part is fine as I have been putting all of the money away. However I think the notice period is the one thats getting me. It is 4 months and while I am happy to do the 4 months, I think I need to ask for the clear definition between whether I am SE or PAYE. Its all so confusing but I think I will ultimately find out Monday when I am called into the office and given a load of stick for leaving. I think on the plus side for them, They wont have to give me the percentage of super profit that I would have got, were I signed up as a partner. 

Grumpy_chap

LP110683 said:

I am working for an employer at present and was paid on a PAYE basis for 4 years. I was then offered partnership back in February and told that my pay would change. They switched this over in March (with no written confirmation) and now I get a monthly lump sum, which includes my NI and income tax payments. I have asked for a payslip and been told I essentially dont have one as I becoming a partner. However, this has not happened yet and I have not signed anything whatsoever. I am wondering if this technically makes me self employed? I have been told I will need to sort my own taxes out. 

I am looking to hand my notice in and my PAYE notice was 4 months. However, if self employed, is this still valid? Any help would be great.

This seems a very odd thing for them to do, particularly at this time with the recent change to IR35 rules.  They may be a small employer so the impact of IR35 changes may not really cover them.

Is the lump sum you now received the same as previous PAYE plus tax and NI?

Is it normal in your business sector for staff to be "promoted" up to Partner?

Have you taken any legal of accountancy advise about the offer to become a Partner?  I assume not, if you've not had any paperwork to review in that regard.

General_Grant

LP110683 said:

Hi. No invoices submitted, and I have taken a few holiday dates here and there. I dont feel bad about the organisation, I am just pre empting some aggression about me leaving and want to make sure they don't try to wrap me up in all sorts of logistical mess. I believe you are correct in the savings and the share of profits. I have been told that the super profit at the end of the year, as an LLP partner would be paid. Obviously I have seen no contract or signed anything. I have just been told what is going on. 

The tax part is fine as I have been putting all of the money away. However I think the notice period is the one thats getting me. It is 4 months and while I am happy to do the 4 months, I think I need to ask for the clear definition between whether I am SE or PAYE. Its all so confusing but I think I will ultimately find out Monday when I am called into the office and given a load of stick for leaving. I think on the plus side for them, They wont have to give me the percentage of super profit that I would have got, were I signed up as a partner. 

No idea what "super profit" is.

At the moment you are an employee as you are not a partner nor a self-employed person who would be submitting invoices.  It is not for your employer to tell you: it will be a matter of fact and all the facts point to your being an employee.  Check the HMRC website on this - see what the HMRC consider as being an employee or self-employed.