Employee status and freelance work

Aquarius685

I work part-time for two different companies, my employment status for each being that of an employee. I occasionally take on freelance work for one day a week for other organisations (ie: on a day when I am not 'employed' by either of them). I recently undertook a job for one of my employers and worked for them on the day that I set aside for freelance work. To clarify, in other words on a day when (using the legal jargon) I am not contracted to work for them.

I did the job and submitted my freelance invoice to my employer. The question therefore is:-

Can my employer legally pay that invoice on the basis of me having submitted it as a freelance worker ?

Or

Since I am already on their payroll, does any payment to me have to go through their payroll to avoid any problems with the Inland Revenue?

I would be very grateful for any replies :j

Elaine_Wilson

Yes

I don't think there is any legal bar to you being paid as self employed whilst you are also an employee but the situation is likely to be examined in more detail by HMRC.

The important thing is the nature of the job you undertook and the conditions applied to it. I think HMRC would take the default assumption that the job was an extension of your employed duties. You will therefore have to be careful to distinguish the freelance work from your normal job.

If it was just a case of you being asked to work an extra day then you are sunk. You are just working paid overtime, similar to staying an extra hour one night.

You ( or rather your "employer") needs to run through all the usual "badges of trade", just as would occur when you start a job with someone new. These will include questions such as -

right to send a substitute
degree of control over your work
do you provide your own equipment or tools
responsibilty for redoing bad work
fixed payment for the work or hourly rate
etc.

Aquarius685

Apologies if this intended reply to Elaine goes drastically wrong, I'm new to 'forums'!

Anyway a big thank you to Elaine for the comprehensive reply. It does answer my question because if that test was applied, I would most probably be regarded as an employee.

:beer:

CannyJock

No, they can only pay me through the payroll

HMRC may not be overly concerned about your Income Tax and NIC on the basis that you would put all these details on your Self Assessment return and pay Class 4 NIC on it. But they will be looking at the company for Employer NIC.

I've a client who employed a part-time book-keeper on a "self-employed" basis. HMRC took the view that they were paying her Net of tax and the company, not the employee, became liable for the Tax and NIC.

jimmo

Yes

Elaine_Wilson seems to have answered the Original Poster’s question really well and has given him the correct advice.
The taxman will always seek to establish that payments from an employer to an employee arise from the employment, but he does accept that it is possible for a person to be both employed and self-employed at the same time.
See this http://www.hmrc.gov.uk/manuals/eimanual/EIM00730.htm

Aquarius685

Thanks so much to John Docherty and Jimmo. I'm posting this because I can't 'find'the thanks link! I feel lucky to have had two expert replies, and keep up the good work Jimmo.

Best wishes from Auarius685