Companies being charged for using subbies

[John Matrix]

Quick question. Will companies soon be getting charged for using subbies by the hmrc and forced to add them onto PAYE? Read something about this and just curious?

 

[Robson689]

How can you add a subcontractor to PAYE? Or do you mean when companies employ people "self employed" to try and avoid the liability of an employee?

 

[John Matrix]

How can you add a subcontractor to PAYE? Or do you mean when companies employ people "self employed" to try and avoid the liability of an employee?

A friend has told me that companies will be subject to charges if they employ a subcontractor for too long and be forced to put them on PAYE. I don’t know much about it. Just what I was told. He said it will make it harder for subbies to sub direct to a company

 

[Mike Johnson]

There has always been a HMRC ruling that if a sub-contractor or consultant is engaged singly for a period that they consider is permanent and only employment then they must be employed on PAYE.

 

[Dustydazzler]

This ‘rule’ has been around for a decade or more...

its almost impossible for the hmrc to police

 

[Cbuk2k2]

It used to be down the the contractor to decide if It was an employer/employee relationship. Now it’s down the the employer, if you’re deemed to be an employee you’re taxed differently. HMRC provide the CEST tool to determine if you’re and employee or not. It comes down to things like if you have to do as instructed, if you supply your own tools, if you can send another spark in your place.

 

[John Matrix]

It used to be down the the contractor to decide if It was an employer/employee relationship. Now it’s down the the employer, if you’re deemed to be an employee you’re taxed differently. HMRC provide the CEST tool to determine if you’re and employee or not. It comes down to things like if you have to do as instructed, if you supply your own tools, if you can send another spark in your place.

What would have to happen for you to be deemed as an employee?

 

[Cbuk2k2]

This only applies if you’re working as a limited company.

If you get shown to be a “disguised employee” they would make you you pay he national insurance you should have as a employee.

If you take reasonable steps to ensure contract is compliant the liability stops with the company, if you’ve just signed the contract then you personally can be held liable.

 

[snowhead]

A subcontractor should be free to have more than one source of income and also free within reason to determine his or her working hours.

If a business employs the services of an individual subcontactor and says the hours of work are Mon to Fri 8 till 4 then that subcontractor is working as an employee.
If the business subs to a company that's different, unless that company only has one employee then as above that could be a disguise.

It's an issue with Courier owner drivers where the van has to be liveried with a company logo, that driver can't do work with the van for anyone else, so could be classed as an employee. But it doesn't mean they can't work for anyone else without using the van, it's still under debate I beleive.

Now I'm retired I see all the vans delivering to my area daily.
More often nowadays they don't have any name on, the Amazon ones definitely don't.

 

[Mike Johnson]

One of my clients had a tax inspection and I was questioned as a consultant on working practice's the one that swung the investigation is that I chose my own working hours, just to be clear I was a VAT registered sole trader at the time, so being a limited company does not apply.

 

[Cbuk2k2]

T

One of my clients had a tax inspection and I was questioned as a consultant on working practice's the one that swung the investigation is that I chose my own working hours, just to be clear I was a VAT registered sole trader at the time, so being a limited company does not apply.

These specific rules are called IR-35, they relate to people working through intermediaries such as limited company’s of similar schemes. If you’re a sole trader they wouldn’t apply.

IR35 - Wikipedia

en.m.wikipedia.org

 

[Mike Johnson]

Not according to the tax inspectors that Audited my client.

 

[Cbuk2k2]

Not according to the tax inspectors that Audited my client.

Were you a soul trader or limited company?

 

[Mike Johnson]

At that time I was a Sole trader.

 

[Risteard]

Were you a soul trader?

Is that similar to a Grim Reaper?

 

[Cbuk2k2]

At that time I was a Sole trader.

Thats why they didn’t investigate you under IR35 then.

Is that similar to a Grim Reaper?

That must be one of the best auto corrects ever

 

[Mike Johnson]

It was the company they where investigating to establish if they should employ someone permanently, I was questioned to see if the consulting I was carrying out for the company could have been done by a permanent employee, which turned out to not be the case, surprise surprise I had a tax investigation shortly afterwards, two tax inspectors spent three days going through my accounts to come up with they owed me £0.90.

 

[Mike Johnson]

Is that similar to a Grim Reaper?

Be afraid, be very afraid.

 

[Aurai]

Quick question. Will companies soon be getting charged for using subbies by the hmrc and forced to add them onto PAYE? Read something about this and just curious?

There is a 2020 development to note, but it does not apply to Self-Employed (at this point I am only offering general thoughts, not specific advice) The new rules are for those who who work under their own service company and only when they work for medium to large companies.