Self employed and hours billable...
Discussion
OH is self employed consultant at large company.
They have now said that if there is no project for her to do she must still come into work but she is not allowed to bill those hours to the company and hence not get paid, so if there is a few days between projects and she cant help colleagues on their projects, then she must not charge.
They say its in the contract... I have not yet seen this funky clause in the contract.
What are the thoughts on this method of payments? Is it allowed?
I have told OH to look for another job as they are pissing her about, as the self employed route is their way of doing probation, after X months they offer the possibility that there may be a full time job, or they keep paying frankly ridiculously low wages, but still pimping her out to work at vodaphone in their office... no doubt at a big charge to vodaphone.
I suggested talking to vodaphone and see if she can make the move permanent.
They have now said that if there is no project for her to do she must still come into work but she is not allowed to bill those hours to the company and hence not get paid, so if there is a few days between projects and she cant help colleagues on their projects, then she must not charge.
They say its in the contract... I have not yet seen this funky clause in the contract.
What are the thoughts on this method of payments? Is it allowed?
I have told OH to look for another job as they are pissing her about, as the self employed route is their way of doing probation, after X months they offer the possibility that there may be a full time job, or they keep paying frankly ridiculously low wages, but still pimping her out to work at vodaphone in their office... no doubt at a big charge to vodaphone.
I suggested talking to vodaphone and see if she can make the move permanent.
Jasandjules said:
Sorry if she is self employed then she bills for those hours she is working available to work.
Oh I get that...But to be made to sit in the office when there is no hours to work and do nothing for 7 hours, is that correct?
As a consultant she has no access to internal comms system so cant email anyone to ask if anyone needs assistance, she can only ask people she sees and they have no work.
www.jobserve.com
Either they give her a permanent job or she gets to work elsewhere when her main "client" don't need her. The taxman would probably take a dim view of it in IR35 terms too.
Either they give her a permanent job or she gets to work elsewhere when her main "client" don't need her. The taxman would probably take a dim view of it in IR35 terms too.
ewenm said:
www.jobserve.com
Either they give her a permanent job or she gets to work elsewhere when her main "client" don't need her. The taxman would probably take a dim view of it in IR35 terms too.
If she is acting as a self-employed sole trader (which the term "self employed" implies) then IR35 has nothing to do with it.Either they give her a permanent job or she gets to work elsewhere when her main "client" don't need her. The taxman would probably take a dim view of it in IR35 terms too.
IR35 only applies if the individual is operating through some sort of "intermediary" i.e. a limited company or a partnership.
worsy said:
OP, is she a sole trader or Ltd?
If the latter how does she pay herself, as I'm sure Eric will provide plenty of advice on that subject.
Those questions aside, would you expect your plumber to come round and sit in your house between projects unpaid?
sole trader... she just files the figures to HMRC as its such a pittance its not worthy of a ltd.If the latter how does she pay herself, as I'm sure Eric will provide plenty of advice on that subject.
Those questions aside, would you expect your plumber to come round and sit in your house between projects unpaid?
Chris Type R said:
Eric Mc said:
If she is acting as a self-employed sole trader (which the term "self employed" implies) then IR35 has nothing to do with it.
Really Eric ? That surprises me - I didn't realise that was the case.(Self Employeed, sole trader IT Consultant)
Under IR35 it is the intermediary's obligation to correctly calculate, deduct and pay over any such PAYE and NI.
IR35 applies when the intermediary is acting as a "block" to prevent the individual from being placed on the employer's books as a proper employee.
If HMRC assess that IR35 should have been applied, then it is the INTERMEDIARY that has to pay over any underpaid PAYE and NI.
If a person is hired purely as a self employed individual (such as the OP describes), then IR35 does not apply,. What happens here is that, if the individual is found to have been incorrectly treated as self employed when, in reality, they should have been treated as an employee, then HMRC will ask for the underpaid PAYE and NI to be paid by the EMPLOYER, not the individual.
Eric Mc said:
IR35 is a method of HMRC collecting PAYE and NI from an entity such as a limited company or partnership or trust (HMRC refer to this entity as the "intermediary) whereby the entity is used as the vehicle through which the individual receives the income he/she has billed for personal services provided.
Under IR35 it is the intermediary's obligation to correctly calculate, deduct and pay over any such PAYE and NI.
IR35 applies when the intermediary is acting as a "block" to prevent the individual from being placed on the employer's books as a proper employee.
If HMRC assess that IR35 should have been applied, then it is the INTERMEDIARY that has to pay over any underpaid PAYE and NI.
If a person is hired purely as a self employed individual (such as the OP describes), then IR35 does not apply,. What happens here is that, if the individual is found to have been incorrectly treated as self employed when, in reality, they should have been treated as an employee, then HMRC will ask for the underpaid PAYE and NI to be paid by the EMPLOYER, not the individual.
Ok, that's clearer, thanks for the detailed explanation Eric.Under IR35 it is the intermediary's obligation to correctly calculate, deduct and pay over any such PAYE and NI.
IR35 applies when the intermediary is acting as a "block" to prevent the individual from being placed on the employer's books as a proper employee.
If HMRC assess that IR35 should have been applied, then it is the INTERMEDIARY that has to pay over any underpaid PAYE and NI.
If a person is hired purely as a self employed individual (such as the OP describes), then IR35 does not apply,. What happens here is that, if the individual is found to have been incorrectly treated as self employed when, in reality, they should have been treated as an employee, then HMRC will ask for the underpaid PAYE and NI to be paid by the EMPLOYER, not the individual.
OP first thing to do is check the contract. Sounds to me like the company she is contacted to are pulling a fast one, taking people on as self employed contractors rather than giving them a proper PAYE job. Time she moved on.
I would also expect the HMRC to take a dim view of this, having full time, permanent staff who are self employed. Do they take income tax from her?
I would also expect the HMRC to take a dim view of this, having full time, permanent staff who are self employed. Do they take income tax from her?
Du1point8 said:
They say its in the contract... I have not yet seen this funky clause in the contract.
What are the thoughts on this method of payments? Is it allowed?
...
I suggested talking to vodaphone and see if she can make the move permanent.
1)see the clause in the contractWhat are the thoughts on this method of payments? Is it allowed?
...
I suggested talking to vodaphone and see if she can make the move permanent.
2)check contract for any clauses for her working directly for voda (trust me, there will be and it wont be allowed)
If it was me , i would stay quiet and find other work
The OH gets a straight wage for the hours she bills and has to work it out herself and pay HMRC, we are making sure that she has the funds in the account for when that happens and needs to pay whatever is deemed to be owed.
I could understand if it was a probation that they were doing but to simply say you have no access internal comms as you are the consultant, therefore no way to find more internal work, then let her work dry up and claim they dont need to pay due to paying her by the hour and stay in the office is a very shady way of doing business.
Its not even a small company, they have thousands of people on the books, however when you are classed as a 'full' consultant you have a fixed pay contract to rely on if project work is low and access to internal comms, whereas she loses her base earnings for not being able to bill.
OH is now looking for another job before dropping this one if the situation is not fixed by offering a permanent job.
I could understand if it was a probation that they were doing but to simply say you have no access internal comms as you are the consultant, therefore no way to find more internal work, then let her work dry up and claim they dont need to pay due to paying her by the hour and stay in the office is a very shady way of doing business.
Its not even a small company, they have thousands of people on the books, however when you are classed as a 'full' consultant you have a fixed pay contract to rely on if project work is low and access to internal comms, whereas she loses her base earnings for not being able to bill.
OH is now looking for another job before dropping this one if the situation is not fixed by offering a permanent job.
Based on the situation you describe, it seems to me that she is not a truly self employed individual. Her "employers" are trying to exercise over her the type of controls they would also apply to their more "normal" employees. Therefore, through their actions they are undermining any claim that they might make to HMRC that she is engaged as a self employed individual.
The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
Eric Mc said:
Based on the situation you describe, it seems to me that she is not a truly self employed individual. Her "employers" are trying to exercise over her the type of controls they would also apply to their more "normal" employees. Therefore, through their actions they are undermining any claim that they might make to HMRC that she is engaged as a self employed individual.
The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
correct she is fully up to date.The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
Du1point8 said:
Eric Mc said:
Based on the situation you describe, it seems to me that she is not a truly self employed individual. Her "employers" are trying to exercise over her the type of controls they would also apply to their more "normal" employees. Therefore, through their actions they are undermining any claim that they might make to HMRC that she is engaged as a self employed individual.
The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
correct she is fully up to date.The stupid thing is that it is THEY who are running the risk of being "found out" by HMRC and it is they who would have to find all the underpaid PAYE and NI amounts that they should be calculating on what they pay this so-called self employed individual.
I presume your OH has properly registered for Self Assessment (within the statutory three month from commencement of self employment date) and is also paying her Class 2 NI payments on a regular basis?
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