Executive Director job offer on contract basis

aroominyork

Marcon said:

aroominyork said:

Marcon said:

What sort of contract - a contract of service (i.e. employed) or for services (not an employee) - and when will it follow? 

It will be a contract for services and will follow in early Jan for a 1 Feb start date.

So if a contract for services denotes being employed, what is the position regarding:

- employer's NIC - is this added to the base salary?

- employer's pension contributions

- annual leave and sick leave?

If employed under IR35 do I need to set up a PSC or do I just declare it on my self-assessment?

No - a contract for services denotes you are not an employee - but you could still be a worker.

Yup, thanks. I misread your previous post. I'll do some reading around the area. 

DullGreyGuy

Marcon said:
IR35 doesn't apply to sole traders, so if you are engaged on a truly self-employed basis, it won't apply to you.

It simply doesn't apply to sole traders... doesn't matter if you are truly self employed or a concealed employee as long as you are a sole trader IR35 doesn't apply.

If you do operate via a PSC you could take no salary and you, your partner and 8 kids have 10% shareholding each and so just payout profits as dividends after deducting your annual family holiday as an AGM, family electric car as a company car etc etc. These options dont apply to the self-employed hence IR35 doesn't either.

Undervalued

aroominyork said:

Marcon said:

What sort of contract - a contract of service (i.e. employed) or for services (not an employee) - and when will it follow? 

It will be a contract for services and will follow in early Jan for a 1 Feb start date.

So if a contract for services denotes being employed, what is the position regarding:

- employer's NIC - is this added to the base salary?

- employer's pension contributions

- annual leave and sick leave?

If employed under IR35 do I need to set up a PSC or do I just declare it on my self-assessment?

It would not normally include any of those as doing so would move it more towards being an employee.

As I mentioned in my earlier posts, if you are not an employee you need to be paid at a significantly higher rate to make up for the lack of these sort of benefits. That said, if self employed you do get some tax benefits. For example you would normally be able to offset a significant part of your car running costs against tax (assuming you need to use your car).

kinger101

IR35 is a red-herring unless you're setting yourself up as a personal service company.  Though the same badges of employment apply.  

@Marcon - do HMRC recognise "worker" as a status.  I thought it was relevant to employment law only, not taxation law.  So for taxation, they're either employed or self-employed, and it is the responsibility of the charity to get this right.

Regarding the contract - the HMRC will be interested in the details rather than what it states on the top.  A decent guide is here.

https://www.accountingweb.co.uk/community/blogs/gabriellaevans/employed-vs-self-employed-determining-worker-status

I personally think you'd be an employee.  Constructing a contract to omit employee rights in an attempt to tip it into self-employed runs the risk of breaking both tax law and employment law.  

Personally, I think they need to engage the services of an accountant/tax adviser with experience in the taxation of small charities.  Or if they can't afford this, speak to HMRC.  

Marcon

kinger101 said:

IR35 is a red-herring unless you're setting yourself up as a personal service company.  Though the same badges of employment apply.  

@Marcon - do HMRC recognise "worker" as a status.  I thought it was relevant to employment law only, not taxation law.  So for taxation, they're either employed or self-employed, and it is the responsibility of the charity to get this right.

Regarding the contract - the HMRC will be interested in the details rather than what it states on the top.  A decent guide is here.

https://www.accountingweb.co.uk/community/blogs/gabriellaevans/employed-vs-self-employed-determining-worker-status

I personally think you'd be an employee.  Constructing a contract to omit employee rights in an attempt to tip it into self-employed runs the risk of breaking both tax law and employment law.  

Personally, I think they need to engage the services of an accountant/tax adviser with experience in the taxation of small charities.  Or if they can't afford this, speak to HMRC.  

To add the above helpful reply, this makes useful reading: https://www.litrg.org.uk/tax-guides/taking-employee/tax-status

OP - it could be helpful to you and the charity if you open that link and scroll down to the section headed 

What help is available with tax status?

aroominyork

Thanks all. This now seems clear. Since the organisation is small it is exempt from making an IR35 determination and the staff seem to be – inappropriately – working on a self-employed basis under contracts for services. My guess is they are utilising a hybrid model and giving annual leave (though maybe no allowance for pension contributions) – this will become clear when I receive a draft contract. They say it is a priority to move people onto employed status so I envisage doing this either during the first month (February) so that I am on PAYE from the first payday, or from the start of the April tax year – I will take advice on this.

Marcon

aroominyork said:

Thanks all. This now seems clear. Since the organisation is small it is exempt from making an IR35 determination and the staff seem to be – inappropriately – working on a self-employed basis under contracts for services. My guess is they are utilising a hybrid model and giving annual leave (though maybe no allowance for pension contributions) – this will become clear when I receive a draft contract. They say it is a priority to move people onto employed status so I envisage doing this either during the first month (February) so that I am on PAYE from the first payday, or from the start of the April tax year – I will take advice on this.

If everyone is working on a self-employed basis, rather than through an intermediary, then nobody would be subject to IR35 and there's no determination for anyone to make.

One minor point which might have slipped their attention is that they'll need to nominate a pension scheme for auto-enrolment purposes as soon as anyone is engaged as an employee.

Best of luck - this sounds a right mess for you to sort out!

aroominyork

I already have a payroll administrator lined up and the charity has identified Nest as their likely pension provider. Whether or not it is easy will come down to whether the staff's current terms are easily transferred from self-employed to employed, or we need to go into consultation. It will all start with me negotiating two contracts for myself: one for contract for services, and an oven ready one for after the transition. (Oven ready deals always work, after all.)

Marcon

aroominyork said:

I already have a payroll administrator lined up and the charity has identified Nest as their likely pension provider. Whether or not it is easy will come down to whether the staff's current terms are easily transferred from self-employed to employed, or we need to go into consultation. It will all start with me negotiating two contracts for myself: one for contract for services, and an oven ready one for after the transition. (Oven ready deals always work, after all.)

One (hopefully final) thought, which I expect you've already had: insurances. Given the confusion surrounding how current 'staff' are engaged, I wonder what the position is on employer's liability insurance, D&O cover and PI, amongst others?

aroominyork

Good question. I think I can guess the answer...