Employing Domestic help
Discussion
fesuvious said:
Thank you, everyone this far.
Q: What is I place an advert for 'self-employed domestic help'?
Would I, by design be seeking only somebody who already deems themselves to actually be self-employed?
Does this make a difference. I would be advertising for somebody who already runs their affairs in such way as they deem themselves to be self employed.
If an individual is obviously "running a business" that supplies domestic help to households, then the people who turn up will be self employed people.Q: What is I place an advert for 'self-employed domestic help'?
Would I, by design be seeking only somebody who already deems themselves to actually be self-employed?
Does this make a difference. I would be advertising for somebody who already runs their affairs in such way as they deem themselves to be self employed.
However, if you contract with one person only and will not allow substitutes or replacements, if you set the hours, you set the tasks, you retain the right to admonish if things go wrong, you in effect, are in charge - then the person you are using fails the case for being self employed.
A self employed individual has to show they are, in effect, running a business so -
they determine to a large extent how the work is done
they set the hours
they can send alternative people in their place
they have their own base of business/place of trade
they advertise their services
they supply their own tools and equipment
they have insurance to cover business errors, mistakes or third party injuries
they are registered for VAT (if their business is large enough)
they have their own staff
they have multiple customers/clients
Eric Mc said:
fesuvious said:
Thank you, everyone this far.
Q: What is I place an advert for 'self-employed domestic help'?
Would I, by design be seeking only somebody who already deems themselves to actually be self-employed?
Does this make a difference. I would be advertising for somebody who already runs their affairs in such way as they deem themselves to be self employed.
If an individual is obviously "running a business" that supplies domestic help to households, then the people who turn up will be self employed people.Q: What is I place an advert for 'self-employed domestic help'?
Would I, by design be seeking only somebody who already deems themselves to actually be self-employed?
Does this make a difference. I would be advertising for somebody who already runs their affairs in such way as they deem themselves to be self employed.
However, if you contract with one person only and will not allow substitutes or replacements, if you set the hours, you set the tasks, you retain the right to admonish if things go wrong, you in effect, are in charge - then the person you are using fails the case for being self employed.
A self employed individual has to show they are, in effect, running a business so -
they determine to a large extent how the work is done
they set the hours
they can send alternative people in their place
they have their own base of business/place of trade
they advertise their services
they supply their own tools and equipment
they have insurance to cover business errors, mistakes or third party injuries
they are registered for VAT (if their business is large enough)
they have their own staff
they have multiple customers/clients
madmover said:
IR35, ESI tests etc are all a load of Tosh given how many grey areas and arguments can be put forward for each method. Of all the legislation in place there's lots of elements which conflict. Many people who work in this way already will go via an umbrella company anyhow...
I don't like the uncertainty surrounding these rules either - but those who chose to ignore them do so at their peril. And Umbrella Companies are no security from HMRC scrutiny.Eric Mc said:
I don't like the uncertainty surrounding these rules either - but those who chose to ignore them do so at their peril. And Umbrella Companies are no security from HMRC scrutiny.
Agreed although there's so many grey areas about adhering to them! As for umbrellas - I give up with HMRC & Scrutiny. £10 per hour should be fine with the correct expenses being claimed adhering to the limits before thresholds are exceeded. But again, as for ESI, IR35 & AWR stuff... it's all that conflicting and messy, there's several views that could be argued. It should be an interesting few months ahead as more court cases set to go ahead surrounding this as there's been non so far really which have reached a conclusion that I'm aware of. It's all just daft!madmover said:
Eric Mc said:
I don't like the uncertainty surrounding these rules either - but those who chose to ignore them do so at their peril. And Umbrella Companies are no security from HMRC scrutiny.
Agreed although there's so many grey areas about adhering to them! As for umbrellas - I give up with HMRC & Scrutiny. £10 per hour should be fine with the correct expenses being claimed adhering to the limits before thresholds are exceeded. But again, as for ESI, IR35 & AWR stuff... it's all that conflicting and messy, there's several views that could be argued. It should be an interesting few months ahead as more court cases set to go ahead surrounding this as there's been non so far really which have reached a conclusion that I'm aware of. It's all just daft!mph1977 said:
AWR is irrelelvant as there's no employee comparator - the primary driver for the AWR was the fact that some employers were using agency staff on inferior terms and inferior rates of pay to the exact same job as their previously appointed directly employed staff - circumventing the AWR is easy though ;- change something in the job description (e.g. exlcude a tasks rarely done or that only a couple of people actually need to do ) and then employ at least one of your agency staff on the 'new' job description ...
Sorry I should make clear that my comment on AWR was in general discussion opposed to specific to lord fesuvious's post (hence why I only mentioned ESI and IR35 initially). I've seen a fair few folk work ways round AWR. The reason they introduced it to start with was designed to try and improve the situation for the workers although there's plenty of cases where this seems to have an adverse effect. Broccers said:
Surely hmrc only care that they get paid, not by who.
It makes a big difference to HMRC when the classification of the individual as "Self Employed" means they collect a lot less Income Tax or (more importantly) National Insurance Contributions.The differential can be even greater if the individual is operating through their own limited company, or an Umbrella Company or (in the more extreme examples) some sort of off-shore based loan trust.
Just Google the ongoing tax case involving the (now liquidated) Rangers FC and HMRC to see how important "employment status" can be.
And that is just the tax and NI situation.
Employees are also much more of a burden because of the rights that they automatically accrue due to their "employment status" (rights to holiday pay, sick pay, maternity pay, minimum wage, etc,etc, etc).
Broccers said:
We are talking about a few quid I reckon they'll actually be glad to be paid at all if you know what I mean.
It can be a lot more than "a few quid". Say you pay somebody £300 a week into their hand for 52 weeks a year. That's a Net Salary for the year of £15,600.
In order to be able to pay that to an individual, for 2014/15 an employer in reality has to set a Gross Salary of £18,535. In other words, the tax and Employee's NI generated on a Net Salary of £15,600 is £2,935. In addition, the employer has to pay an additional amount to HMRC in the form of Employer's NI - which on these figures comes to extra £1,460.
This means that the payments of £15,600 to the individual generates a further £4,395 payable to HMRC.
If you have been paying someone £15,600 but assuming that they are self employed when in reality they aren't, then HMRC will ask YOU as the employer, to pay to them the missing £4,395. If this has been going on a for a number of years, this could be crippling.
Even if the individual had been returning this income "properly" as a self employed individual using Self Assessment (which is not always the case), HMRC would still come after you as the employer who failed to operate PAYE correctly.
Over the years, there have been a number of cases where this has happened.
Broccers said:
It really is as simple as getting the 'person' to invoice you for their services and let them worry about their own tax affairs. It would be assumed that a low hours worker had other jobs of similar nature, like a cleaner.
You accountants make life too difficult...
which is all well and good until they grass the employer up to the HMRC or the minimumm wage enforcement people (part of DWP i think) ... You accountants make life too difficult...
Broccers said:
It really is as simple as getting the 'person' to invoice you for their services and let them worry about their own tax affairs. It would be assumed that a low hours worker had other jobs of similar nature, like a cleaner.
You accountants make life too difficult...
It's not the accountants. It's the taxman. And the reason he makes life difficult is to stop people deliberately or accidentally reducing the amount of tax that they pay.You accountants make life too difficult...
At the end of the day the OP can either take his accountants advice or ignore it. Only he stands to gain or lose. Accountants can only advise.
You are entitled to disagree - but it's not the accountants who make the rules and regulations. All we can do is advise people as best we can to comply with them or, if they wish to skirt around them, the extent of the risks they are taking.
That's all I have done in the above posts.
Simply deciding that someone is self employed because it suits one or both parties will hold no truck with HMRC - if they wish to make an issue out of the situation.
It's up to the parties involved to decide whether they want to take the risk of having to sort out a Revenue investigation - and for the deemed employer to be prepared to pay the underpaid tax and NI if the result goes against them.
As I mentioned earlier - look at the Rangers case. They actually won their case - but they still ended up financially ruined.
That's all I have done in the above posts.
Simply deciding that someone is self employed because it suits one or both parties will hold no truck with HMRC - if they wish to make an issue out of the situation.
It's up to the parties involved to decide whether they want to take the risk of having to sort out a Revenue investigation - and for the deemed employer to be prepared to pay the underpaid tax and NI if the result goes against them.
As I mentioned earlier - look at the Rangers case. They actually won their case - but they still ended up financially ruined.
Let's say this person earns over 10k per year as an employee at this one job. Would the person paying also be liable for pension payments too...
Just checked. From Jan 2017 if this person has no other job and they are employed I would expect you'll be paying for their work place pension as well.
Just checked. From Jan 2017 if this person has no other job and they are employed I would expect you'll be paying for their work place pension as well.
Edited by Broccers on Monday 25th August 23:27
Mr Pointy said:
Eric
In relation to another thread does it make any difference to the employer having to pay the tax & NI due if the deemed employee is a sole trader or operating as a limited company?. Would they be liable if the former, but not if the latter?
It makes a BIG difference.In relation to another thread does it make any difference to the employer having to pay the tax & NI due if the deemed employee is a sole trader or operating as a limited company?. Would they be liable if the former, but not if the latter?
If the engaged individual is claiming to be a sole trader, then it is the deemed EMPLOYER who has to find the underpaid taxers.
If the engaged individual is operating through his/her own limited company, then it is HIS LIMITED COMPANY that has to find the missing taxes (i.e. IR35 should have been operated).
You may now understand why some organisations are insistent that contractors come to them through their own limited companies.
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