HMRC - Freelance v PAYE....am I missing something?

[StevieBee]

Part of the services we provide is doorstep engagement that involves the hiring, training and deployment of people on a fixed term contract. It's not a career by any means but a fair bit above min-wage and we do look after them. One of the ways we do this is to offer either a PAYE contract or Freelance. If the latter, they have to provide their UTR, an invoice and sign a form to state that they accept the responsibility for paying Tax and NI.

An example of how this works is that for a project last year, we had a freelance graphic designer. This chap was solo, self-employed and operated his business via sole-trader arrangement. Design work was sporadic and so he took the role with us to fill the financial void. He went for the freelance option, billing us via his design business.

Our visit from the HMRC today revealed that this is not allowed. We can only appoint a Doorstep Advisor on a Freelance basis if that person is a professional Freelance Doorstep Advisor, individuals that do not really exist.

An example they gave was this.

A man appointed on a freelance basis by a supermarket to collect trollies from the car park for three days a week cannot work for the other two days on a freelance basis for another supermarket stacking shelves. This is because that his not his trade; he is a freelance trolly collector. He can work for the other supermarket but only on a PAYE basis.

So, what am I missing here? Seems very odd to me.

[StevieBee]

98elise said:

I'm no expert, but I would assume that you can't do two unrelated trades through the same company

I asked the same question and the answer is that no, you cannot. This thus renders the ability of a company to diversify unless they set up a new company to do so. When I put this to them, the recognised the absurdity of this and said they’d investigate further.

Eric Mc said:

I think a lot of the problems and confusion about "self employment" status is the term "self employment" itself. I much prefer the term "sole trader"

I think this is the nub. The people we’ve taken on on this basis have all been sole traders and take the work as it either fills gaps in their cashflows or time in otherwise empty diaries.

The graphic designer example is typical. We’ve also had cleaners, haidressers, etc.

So, I guess if the graphic designer was to register and promote himself as a communication consultant and advisor, we could provide both graphic design services and undertake doorstep advisory work under the same heading and thus not be an issue.