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PAYE or let them do it themselves

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I have set up business as a home help company, cleaning, sorting out tradesman etc and would like to know where i can find out the following. If i send a cleaner round to a home but the cleaner supplies or the home owner supplies the stuff and the cleaner tells me when and where she can work do i need to pay her tax or can i just write a chq to her under her own name and not have to worry about her NI or Income Tax?

Any advice would be great
end the tv tax

Comments

  • Pennywise
    Pennywise Posts: 13,468 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The following is a link to HMRC's webpage which gives information on who is employed and who is self employed.

    http://www.hmrc.gov.uk/employment-status/index.htm

    If it points to them being your employees, you have to register as an employer and deduct/pay tax and NIC under the PAYE regulations. You may also fall into the construction industry rules if you are providing tradesmen, but that is less likely and depends on the type of jobs done and the type of customer. You will also have to pay holiday pay, SSP/SMP, and comply with all the employment laws, i.e. contracts of employment, employers liability insurance, minimum wage, health & safety, etc.

    Only if your workers are clearly "self employed" from the above link can you pay them without tax/NIC in which case they have to register as self employed and issue you with an invoice. If you go down the self employed route, it would be wise for you to obtain "proof" of their self employment, such as sight of their public liability insurance, an advert in Yellow Pages or similar, etc., just something to help you prove, in case of enquiry, that you genuinely believed your workers to be legitimate self employed.

    You may find it a hard job to justify them being self employed if you pay them by the hour, control their hours, etc.
  • fengirl_2
    fengirl_2 Posts: 4,530 Forumite
    Just to add to the above, if you treat your people as self employed when they are actually employees, it is you who would be required to pay the unpaid tax and NIC, plus interest. It is therefore important to get it right from the start. If in doubt, as to speak to the status iinspector at your local tax office and obtain a ruling in writing.
    It is the relationship between you and the workers which is important here. the fact that they are in Yellow Pages as something self employed is not relevent to what they do for you.
    £705,000 raised by client groups in the past 18 mths :beer:
  • I will get in touch with my local tax office. If anyone else has any guidence on this please advise and also of any experiances you may have had in this part of the self employment mine feild.
    end the tv tax
  • Pennywise
    Pennywise Posts: 13,468 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I wouldn't really rely on the local HMRC status inspector to be impartial. It's like asking turkeys to vote for christmas. It might be OK if it was clear cut one way or another, but if it is in the "middle ground", which most status cases are, the status inspector will be swayed towards employment as HMRC get more tax/NIC that way. Given the considerable number of status disputes thrashed out at commissioners meetings (appeals) each year, many of which are won by the taxpayer against the status inspector, the status inspectors aren't always right.

    Furthermore, it is possible (if not likely) that some of your workers will be employed and some self-employed, depending upon what they do for you and whether they are employed or self employed elsewhere. It is likely that some "cleaners" for example will be self employed cleaners elsewhere and will prefer to use their own equipment and materials, whilst others won't and will rely on you providing equipment and materials.

    What you need to do is read and make sure you understand the HMRC link given above, so that you have a better understanding of the criteria. If you know how it works, it is then easy for you to "tailor" the services you provide and the workers you use to your best advantage.

    Re the Yellow Pages, of course an advert in Yellow Pages doesn't confirm the employment status of a worker and that is not what I meant - I meant it as additional proof that someone who claimed to be self employed for other work was legitimate.

    Even though the main tests of employment versus self employment don't take into account the other "work" that the worker does, the position of the worker can be significant in border-line cases - for example if there are a number of factors indicating self employment, but likewise a number of factors indicating employment, it is border line - then if it transpires that the worker has several other clients, all of which are properly self employment contracts, then the border-line case suddenly looks a lot more like self employment. Other work isn't a decision maker in itself, but can be used to sway a border line case.
  • fengirl_2
    fengirl_2 Posts: 4,530 Forumite
    If one is not to rely on HMRC to make a ruling when it will be them who comes calling to search out wrongdoing, who is one to trust? In my view it is best to sort these things out before you start in order to avoid problems in the future, when it gets more expensive.
    £705,000 raised by client groups in the past 18 mths :beer:
  • This situation sounds very much a sub-contractor worker surely? Obviously do check with HMRC like everyone says, but this how my company has always worked.

    We use self-employed person to go into clients homes, sell/fit a product (which we supply) and the self-employed person gives us an invoice for the work done. We pay them the invoiced amount and they file their own tax returns etc. We have worked like this for years and from time to time, some people have asked if the payment would be cash in hand (not going through the books) to which we have replied absolutely not, their details are on our accounts and so if they don't declare their earnings to HMRC they could be investigated.

    I think that when the OP says "the cleaner tells me when and where she can work" this should be classed as someone self-employed. If the OP had to take them on as an employee then those terms would seem unacceptable. But like I said, I am only giving my opinion like the OP asked and this definitely needs official confirmation from the powers that be ;)
  • koru
    koru Posts: 1,537 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    I agree that HMRC will err on the side of PAYE, if it is not clear. But better that than find you owe several years of PAYE.

    The staff should not mind too much, as it may save them the hassle of submitting their own PAYE returns. If they plan not to pay tax on some of it, they would mind, of course. But in that case, you are better off not having these people as staff, because you are likely to get in trouble when they get caught by HMRC. Plus, if they are willing to diddle taxes, who else might be they be willing to diddle?
    koru
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