Employee wanting to be paid as a contractor

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  • Savvy_Sue
    Savvy_Sue Posts: 46,024 Forumite
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    As well as working through the HMRC questionnaire to determine if this is possible or not, what does your payroll provider and / or accountant say about it?
    Signature removed for peace of mind
  • Vectis
    Vectis Posts: 692 Forumite
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    aj9648 wrote: »
    Thanks

    I!!!8217;ve told her to invoice me



    Really? Sounds like you've jumped straight into that decision within 24 hours of asking the question.

    Is she still employed by you or has she resigned? If she's resigned, what about her notice period etc?

    And, are you absolutely sure HMRC wont be viewing her as still an employee as she's doing exactly the same work as previously, without even a break in between?
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    Still no answer on the most important issue whether she's operating her own limited company or not.
  • aj9648
    aj9648 Posts: 1,372 Forumite
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    Pennywise wrote: »
    Still no answer on the most important issue whether she's operating her own limited company or not.

    Hi

    Yes she does - she has provided some details, last year accounts, companies house details etc
  • unforeseen
    unforeseen Posts: 7,280 Forumite
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    She will be no better off unless she lies on her tax return. It is clearly inside IR35 and she should be paying the same tax & NI as if she was PAYE. As I said, she is planning tax evasion.

    Do you want to be party to that? HMRC may come after you as well if it gets known about.
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    unforeseen wrote: »
    She will be no better off unless she lies on her tax return. It is clearly inside IR35 and she should be paying the same tax & NI as if she was PAYE. As I said, she is planning tax evasion.

    Do you want to be party to that? HMRC may come after you as well if it gets known about.

    Not necessarily. HMRC are losing most IR35 cases at the moment. It depends on the exact small detail of the work, how she does it, what the contract says etc. Even if she is caught by IR35, it's her problem, not the OP's, because she's working via her own limited company. HMRC can't/won't go after the OP if he's paid her via her limited company, i.e. pays limited company invoices to the limited company bank account.
  • prowla
    prowla Posts: 13,162 Forumite
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    unforeseen wrote: »
    She will be no better off unless she lies on her tax return. It is clearly inside IR35 and she should be paying the same tax & NI as if she was PAYE. As I said, she is planning tax evasion.

    Do you want to be party to that? HMRC may come after you as well if it gets known about.
    If she is working for multiple clients via that limited company, then it may make sense.


    Whether or not it is inside IR35 is not a a worry for the client, provided the contract is an accurate statement of the role. Indeed the fact of there being multiple clients may be relevant to the in/out criteria.



    If the client engages in a B2B arrangement, then that is perfectly alright.


    It is entirely possible for a contractor to perform similar activities to a PAYE employee.


    On the matter of evasion/avoidance, it's not something the people here can decide upon based upon imprecise information in a chat group.
  • unforeseen
    unforeseen Posts: 7,280 Forumite
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    Each contract stands on its own as inside or outside IR35. I have worked Inside and outside simultaneously before.
  • Ozzuk
    Ozzuk Posts: 1,884 Forumite
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    If she will now be offering you a service contract instead of directly working for you then you should draw up a contract with her. You need to protect yourself and her - obviously this depends on what she is doing for you. As an employee you tell her what to do, as a partner you need a contract that specifies what her company will do for you. for instance, if she goes off sick as an employee then its up to you to provide cover. If she operates her own company then in theory she can decide who she sends to work for you.

    Lots to think about - other topics...GDPR compliance (your responsibilities and hers), insurance cover (her), contract end terms, payment terms, confidentiality clauses, access rights...the list goes on!
  • Mistral001
    Mistral001 Posts: 5,349 Forumite
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    edited 11 June 2018 at 1:01PM
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    There is certainly more to this than meets the eye. The employee has obviously put a very good case to the OP for ceasing to be an employee in terms of the cost savings that the employer will make.


    However, the employee probably will not strictly speaking be allowed to do this and will break HMRC rules as others have indicated. I would not collude with them in their cunning plan. It sets a bad example to other employees apart from everything else as no doubt this employee will be boasting about how much more they will have in their pocket as a result of their questionable expenses they will be claiming against tax etc..
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