Self-employment?

[Dave Plowman (News)]

They won't mind provided he's on PAYE...

[Farmer Giles]

Then he wouldn't be self-employed.

[Dave Plowman (News)]

It's a very grey area. Casual work often has PAYE deducted, but the person paying it isn't classified as an employee.

[Number 5]

Thanks for all the replies,

The job is pretty much full time as "self employed" - I guess it allows them to to skip things like holiday pay, notice periods and they get to pretty much to control contractors as full time staff etc. It seems alot of builders around here are doing this.

Anyway thanks

[Dave Plowman (News)]

That's what I guessed.

Then they're breaking the law. If they employ someone on a 'rolling' basis, they are entitled to holiday pay etc, and should be on PAYE.

If they are paying you gross, you might well have problems after you fill in your next self assessment form. To be truly self employed, you need to work for a number of 'employers' within the year to qualify for self employment status from the IR.

[Number 5]

Hi,

I've been looking at this and can't seem to find info on what you say (mainly the DWP site) - I'd be interested to find out more if you could point me to a link or something.

Cheers

[Dave Plowman (News)]

Don't have one I'm afraid - this all came from my union. Broadcasting has gone through this idea of sacking people and then bringing them back to do exactly the same job as 'self employed' and the IR are very hot on it.

I'd suggest you find yourself a decent accountant and take his advice. If you do get self employment status, he'll more than save his cost every year.

[John Rumm]

They could set up a rolling contract which would be a legit way of acquiring the services of a self employed person if they wanted - however the contract would need to be carefully written to achieve this, and it would need to reflect the actual working practices and the intention of the client and worker. In this case however I suspect that you are right and that does not sound like that is what they are trying to do.

Alas there is no such thing as "self employed status" or indeed even a right to be self employed enshrined in legislation. Hence even if you request to be treated as a schedule D worker they can still attempt to classify you any way the see fit, and it is up to you to argue the toss with them if you disagree*

One advantage of working on contract as a sole trader (i.e. self employed) is that IR35 does not apply, and hence if there is a disagreement as to the true nature of the relationship it will be the employer who is expected to stump up for PAYE and NI on the money paid not the contractor.

• Assessing self employment status is a very complex process in this country because nothing is laid down in statue. Much of the decision has to be made based on case law which has been accumulated in the courts over the last 100 years or so. You need not only look at the details of each engagement (you can be simultaneously self employed and employed on two concurrent engagements), but also the overall "big picture".

The courts have in the past based decisions on various aspects of contractual agreements between parties like:-

- Is there a master servant relationship?

- Is there a requirement for the worker to carry out the work personally, or can he select a substitute?

- Are you subject to "direction and control" as to how, why, when etc. that the work is carried out?

- Are you operating (and do you appear to be) in business on your own account?

- Do you provide your own tools, and training?

- Are you part and parcel of the employers/clients organisation?

- Is there the required minimum mutuality of obligation required to create employment?

- What is the intention of the parties?

- Can you profit from sound management of your business?

and so on....

Each of these need to be assessed and weighted (on a scale that is not legally defined anywhere!) to form a picture of pointers "to" and "away" from employment. Very few can be considered a "knock-out" blow that will force a decision in one way or the other.

Needless to say, the IR will attempt to interpret the "facts" in which ever way is more profitable for them!

And finally, just to add insult to injury, you can end up being construed as employed for legal purposes, but self employed for taxation purposes and vice versa. Many of the same test apply to deciding both, but there are subtle and incompatible overlaps. Hence proving one does not prove the other.

[Dave Plowman (News)]

They will, however, issue you with a letter giving your status if they are satisfied you conform to the points you've given below. In my industry, larger employers require to see this before paying gross - otherwise they treat you as casual labour and deduct PAYE and NI.

Hence the fact that many will deduct PAYE and NI if they're not certain.

You've missed out perhaps the crucial one - that of having several different employers within a set period. 6 or so in a year seems to suit them.

Yes - the whole thing is a minefield.

My union - BECTU - has taken the IR to court in an attempt to clarify things.

For example, very few in broadcasting genuinely set their own hours - since it's a team effort everyone has to be there at the same time for production. Same with tools of the trade. A cameraman on a location production might well supply the required equipment - but not when working in a studio. The above test case involved a vision mixer who always works 'indoors' so wouldn't even need protective clothing - and the only tool he might be expected to supply is a pencil.

Yup. Just try getting unemployment benefit for one thing. Even although you're on PAYE...

[Dave Liquorice]

The "weighting" on that doesn't seem as high as showing that you do run a business and carry the risks of doing so. ie. you choose to accept or decline work, negotiate the terms/pay levels, you are out of pocket and have to use the courts if someone doesn't pay, pay your own PL/PHI/Life insurances, make your own pension arrangements etc etc.

Quite I had a very nervous few weeks earlier in the year when the IR wanted evidence of my self employed status. The 12 months they wanted details for I'd only worked for 3 companies, two of them had a total of 3 jobs out of 15 or so. "The Letter" did arrive I'm glad to say.

I'm not looking forward to the renewal, I've only worked for one company since... I've had the odd offer from others but due to being comitted elsewhere I've had to decline. I keep intending to ask them for a letter saying they did offer work for such and such a date but it was declined, I can then show invoices or other evidence of my unavailabilty.

And note that no final ruling was ever made in that case, the IR gave up pursuing it. AFAIK no precedent in law was set but at least some changes to the rules appeared...

[John Rumm]

They will also reserve the right to change their mind later should the decide that "new evidence has come to light"....

yup - hence one of the attractions of incorporation to avoid all that... well it used to be ;-)

Or in my industry, simply avoid using you unless you are incorporated...

Yup that helps - it's a pointer to being "in business on your own account". The reverse situation (i.e. only one client) may or may not be a pointer the other way depending on circumstances)

The PCG

has had a few bites at that cherry as well. They never managed to win the knock out blow to kill IR 35 outright with a judicial review at the start, but they have been very successful in winning individual cases since then (not sure what the stats stand at now, something like PCG 400, IR 2!)

That sounds like "Hall v Lorimer" - which is actually a very interesting (and useful) case especially as it got as far as the court of appeal, and can thus set legal precedent. (Cases that only get as far as the commissioners don't set precedent in the way hight court or appellate court decisions do).