S/E Contract question
Discussion
"7. The practice will pay the agreed fees without the deduction of tax and national insurance contribution as the dental hygienist is a self employed independent contractor. However the dental hygienist agrees to indemnify the practice in the event that the practice is subsequently held liable for these payments by the Inland Revenue."
Can anyone tell me if this is enforceable please? Any other comments? I'm not sure how I'm meant to indemnify against this.
Thanks
Can anyone tell me if this is enforceable please? Any other comments? I'm not sure how I'm meant to indemnify against this.
Thanks
It is possible that the HMRC will decide that, despite the name given to a relationship by the parties, it is in reality an employment relationship. In that event, an indemnity in respect of tax and employee's NI contributions could be called upon.
The agreement ought to be limited to employee NI, not employer NI. it would arguably be contrary to pubic policy to require an employee to pay the employer's contributions.
The agreement ought to be limited to employee NI, not employer NI. it would arguably be contrary to pubic policy to require an employee to pay the employer's contributions.
Breadvan72 said:
It is possible that the HMRC will decide that, despite the name given to a relationship by the parties, it is in reality an employment relationship. In that event, an indemnity in respect of tax and employee's NI contributions could be called upon.
The agreement ought to be limited to employee NI, not employer NI. it would arguably be contrary to pubic policy to require an employee to pay the employer's contributions.
Thanks very much, it is a debated profession to be truly s/e - especially while we still work to the prescription of a dentist. This particular clause makes me uncomfortable, I'll ask for it removing initally. The agreement ought to be limited to employee NI, not employer NI. it would arguably be contrary to pubic policy to require an employee to pay the employer's contributions.
I would much rather be employed if I had a choice.
No - if HMRC decides that the dentist should have employed you as a member of their staff, the legal situation is it is THEY who have to pay over the missing PAYE and NIC amounts (Employee's and Employer's). In fact, HMRC might even refund to you incorrectly collected Self Employed Class 2 and Class 4 NI.
They are trying to cover themselves for such an eventuality but I am pretty sure that they couldn't make such an indemnification stick. Perhaps a chat with a legal type person might be worthwhile?
If you decided to run your "business" as a limited company, depending on how you remunerate yourself from the company, HMRC would come after your company (not the dentist) for any underpaid PAYE or NI amounts.
They are trying to cover themselves for such an eventuality but I am pretty sure that they couldn't make such an indemnification stick. Perhaps a chat with a legal type person might be worthwhile?
If you decided to run your "business" as a limited company, depending on how you remunerate yourself from the company, HMRC would come after your company (not the dentist) for any underpaid PAYE or NI amounts.
It may be right if you're self employed as tested by the standard HMRC measure and you have nothing to fear. If you're not truly self employed (only working for one dentist, don't buy your own equipment and you look like an employee), then both of you should be wary about any contract. Good luck!
Eric Mc said:
No - if HMRC decides that the dentist should have employed you as a member of their staff, the legal situation is it is THEY who have to pay over the missing PAYE and NIC amounts (Employee's and Employer's). In fact, HMRC might even refund to you incorrectly collected Self Employed Class 2 and Class 4 NI.
They are trying to cover themselves for such an eventuality but I am pretty sure that they couldn't make such an indemnification stick. Perhaps a chat with a legal type person might be worthwhile?
If you decided to run your "business" as a limited company, depending on how you remunerate yourself from the company, HMRC would come after your company (not the dentist) for any underpaid PAYE or NI amounts.
Yes, if you go ltd, watch out for IR35They are trying to cover themselves for such an eventuality but I am pretty sure that they couldn't make such an indemnification stick. Perhaps a chat with a legal type person might be worthwhile?
If you decided to run your "business" as a limited company, depending on how you remunerate yourself from the company, HMRC would come after your company (not the dentist) for any underpaid PAYE or NI amounts.
Eric Mc said:
Perhaps Breadvan 72 can explain why such an unfair clause can be enforced in law?
In English contract law, there is no general rule requiring a contractual term to be fair. Fairness is required by statute in some consumer contexts, and by common law in relation to restrictive covenants. Other than that, contract law is somewhat Darwinian. The late Lord Bingham was keen on introducing the German contract law concept of fair and honest dealing, but so far this has not happened.
If this is such a common arrangement between dentist's practices and hygenist then it should be possible for the hygenist to take out insurance to indemnify themselves. The underlying cost of the policy (i.e. without the costs and profits etc.) should reflect the risk of this ever coming to a head. The cost of this insurance should also be recoverable for tax purposes.
Do these policies exist?
Russ
Do these policies exist?
Russ
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