Hiring a person for 3 months? Tax N.I - Help :-)

[AE82GT]

Hi PH Collective,

I run a small Ltd company and need to hire a trainer for a specific client project that will call for more resources than I have time currently. This is funded by the client for a period of 3 months with a view to it possibly becoming a more permanent arrangement / addition to the services I offer them if they are happy with the results.

Whats the best, above board way of engaging this person for a short period? - Just put them on the books, make it clear that it is a 3 month contract and thats that? Run the payroll, pay the NI, job done ...?

Advice much appreciated.


AE.

[Eric Mc]

The PAYE system certainly can cope with short term engagements. If the person is being hired as an employee, even a temporary one, then this is the correct path to take.

[z4chris99]

hire as freelancer?

[Eric Mc]

Only if the person really is a freelancer.

The individual has to be truly "self employed" (i.e. operating in the manner of a sole trader business) for this to work.

HMRC will tell you that this is not a matter of choice - but a matter of fact.

[z4chris99]

you can tell them to register as self employed

if they really want the job the will. And it's less headache for you.

happens alot in film, design, architecture, fashion etc

[Eric Mc]

z4chris99 said:

you can tell them to register as self employed

if they really want the job the will. And it's less headache for you.

happens alot in film, design, architecture, fashion etc

Absolutely not.

A prospective "employer" cannot force somebody they are hiring to be "self employed".

Read up on the rules and regulations governing "employment/self-employment" status.

Of course, in the real world, may "employers" try this on - but that does not mean they are correct.

[z4chris99]

I'm not saying it's legal. but it's what in real life they do

[Eric Mc]

z4chris99 said:

I'm not saying it's legal. but it's what in real life they do

Nothing to do with legality or illegality.

It's to do with the nature of the engagement, what types of taxes and NI are due and which entity has primary responsibility for paying over those taxes.

If HMRC decides that the wrong approach has been taken, they won't be raising criminal prosecutions, but they will ask that the correct tax and NI be paid - and if the amounts are large, the "employer" could find themselves in big trouble.

Look at what is happening with Rangers FC.