Am I really self-employed?

sefx

Hello everyone,

I wondered if anyone could explain something to me. I’ve recently been offered to work within an aesthetic business under the context of ‘self-employment’. However this is where I’m slightly confused, I do not have my own business and ultimately will be working within the business under their name E.G. SamatAestheticsUK (not the real name of the business).

I was looking at what I could do in terms of protecting my assets as I’d read that if you’re self-employed then technically your personal assets would be at risk if a client sued you and you was in financial difficulty etc. Through reading all about this sort of thing, I’ve become very confused about whether I am self-employed or not.

I’ll breakdown the situation as best as I can. 

- The business owner has advised that they would be taking 40% (initially had been agreed at 20%) of all my earnings and this was because they are now a VAT registered company and they have to pay VAT on all the earnings the business takes (because the business earns over the threshold per year).
- I have to wear a uniform
- I can work whatever hours/days I choose
- The owner has stated that clients CANNOT pay me personally and that all the sales have to go through the main till, they will take the 40% and then pay me the rest
- I have my own personal insurance. The owner said I couldn’t be part of their policy as I’m ‘self-employed’ 
- The owner buys all the products. I asked about buying these myself as I’m not earning enough myself to be classed as a ‘VAT’ registered company but the owner wasn’t happy about going down this route. But if I’m self-employed, am I not my own company and therefore will pay the VAT when initially buying the product but not have to pay it on sales as I won’t be earning anywhere near close to the VAT threshold amount. 

It’s very confusing. Can anyone offer some clarification on this situation and where I stand with everything?

Thanks

Savvy_Sue

Try working your way through this: https://www.gov.uk/guidance/check-employment-status-for-tax

Note that this kind of arrangement is not uncommon in certain lines of work, eg you'll hear talk of renting a chair at a hairdressers. 

CKhalvashi

Regarding the 40%, if they're acting as your agent they'd only pay VAT on the 20%, so it becomes an effective 24% commission. 40% becomes 1/3 and even if full VAT were to be payable by the company, you'd be looking at 36.67%, not 40%

If you're subcontracting on something, there are many scenarios where this would be the same position.

I would do this on a short term basis, especially when we need temporary cover at short notice, but definitely not on a longer term basis which it sounds like this is. Ultimately though, this will depend on whether the industry has agreements with HMRC (many do) and the terms of the agreements.

In short, my personal opinion is that the company is trying it on.

Grumpy_chap

sefx said:

Hello everyone,

I wondered if anyone could explain something to me. I’ve recently been offered to work within an aesthetic business under the context of ‘self-employment’. However this is where I’m slightly confused, I do not have my own business and ultimately will be working within the business under their name E.G. SamatAestheticsUK (not the real name of the business).

I was looking at what I could do in terms of protecting my assets as I’d read that if you’re self-employed then technically your personal assets would be at risk if a client sued you and you was in financial difficulty etc. Through reading all about this sort of thing, I’ve become very confused about whether I am self-employed or not.

I’ll breakdown the situation as best as I can. 

- The business owner has advised that they would be taking 40% (initially had been agreed at 20%) of all my earnings and this was because they are now a VAT registered company and they have to pay VAT on all the earnings the business takes (because the business earns over the threshold per year).
- I have to wear a uniform
- I can work whatever hours/days I choose
- The owner has stated that clients CANNOT pay me personally and that all the sales have to go through the main till, they will take the 40% and then pay me the rest
- I have my own personal insurance. The owner said I couldn’t be part of their policy as I’m ‘self-employed’ 
- The owner buys all the products. I asked about buying these myself as I’m not earning enough myself to be classed as a ‘VAT’ registered company but the owner wasn’t happy about going down this route. But if I’m self-employed, am I not my own company and therefore will pay the VAT when initially buying the product but not have to pay it on sales as I won’t be earning anywhere near close to the VAT threshold amount. 

It’s very confusing. Can anyone offer some clarification on this situation and where I stand with everything?

Thanks

What type of role is this?
What industry?
What type of contract?  

sefx

Thanks for everyone’s replies. I know that I am ultimately ‘renting’ a chair and however the owner wants to paint it, I’m paying a 40% fee per each client which is fine.

However in terms of being classed as ‘self-employed’, I do not have my own seperate business and clients have to pay the business I’m working for, product cost is taken and then 40% is taken off this and then they pay me the ‘money I’ve earned/wage’ at the end of the money. 

Does this sound like self-employment?

sefx

The end of the month*** (that should have said)

NSG666

sefx said:

Thanks for everyone’s replies. I know that I am ultimately ‘renting’ a chair and however the owner wants to paint it, I’m paying a 40% fee per each client which is fine.

However in terms of being classed as ‘self-employed’, I do not have my own seperate business and clients have to pay the business I’m working for, product cost is taken and then 40% is taken off this and then they pay me the ‘money I’ve earned/wage’ at the end of the money. 

Does this sound like self-employment?

I used to be a self employed plumber and often worked sub-contract to builders (construction has it's own system but bear with me). The 'client' paid the builder and the builder paid me - hopefully the builder charged the client more for my services than I charged him. I had to have my own public liability insurance even though the client would have had to claim from the builder and the builder claim from me. I was responsible for my own work and scheduling and if I had to sort out any problems that were of my making then it would have been at my expense. With not too much of a leap this is your situation but both parties know what is being charged and who is getting what up front?

When my wife had a pub she had to buy the majority of her products from the pubco but it was her business and she was self employed - similar to your situation?

You can protect your personal assets by creating a limited company and being the MD of it.

razord

Will you not have to invoice the "employer" in order to get paid?

Marcon

sefx said:

I was looking at what I could do in terms of protecting my assets as I’d read that if you’re self-employed then technically your personal assets would be at risk if a client sued you and you was in financial difficulty etc. Through reading all about this sort of thing, I’ve become very confused about whether I am self-employed or not.

Thanks

Best way to protect your assets is either to have a clause in your contract (and you do need to have a contract for services to ensure both sides are sure what has been agreed) limiting your liability; or better still, have both a contract and 'trade' through your own limited company. Not nearly as daunting or expensive as you might fear - see https://www.gov.uk/browse/business/setting-up

ACG

I am unsure how you can get insurance or why you would even need insurance. 
I have self employed brokers working for me, they use our branding, the money gets paid to the business, we take our cut and dish out the rest. They fall under our insurance. 

Ultimately if there is an insurance claim, the customer for all intents and purposes is dealing with the company and not you as an individual. That is who their claim would be against as that is who has supplied the service and that is who would be on the receipt. 

ACG

But if the customer is paying the main firm surely the contract is between customer and firm.
If the customer is paying the person directly who is just renting a chair I could understand. 

As you say it seems quite specialised and unique to the industry.