Any fallout from registering as self employed?
Discussion
A good friend of mine has recently started work for a landscaping company. The boss has around six young guys working for him, but not employed by him, as he says he can't afford to employ them directly. He asks for an invoice at the end of every week and pays them all by cheque leaving the guys to sort out whether they pay tax etc!
My mate says at least two of them have been working for him for about six years and have never paid any tax or stamp on their earnings. Said mate wants to pay his dues so reckons he'll register as being self employed, but having done a bit of research I've told him he's not strictly self employed as he works for the same person each week.
He loves the job and doesn't want to leave so hence the question as to whether there will be any fallout for him from HMRC if they find out he's not, strictly speaking, self employed?
Forgot to mention that the boss is married to an accountant, so she must be aware that what he's doing is illegal IMHO.
Any advice I can pass on gratefully received.
My mate says at least two of them have been working for him for about six years and have never paid any tax or stamp on their earnings. Said mate wants to pay his dues so reckons he'll register as being self employed, but having done a bit of research I've told him he's not strictly self employed as he works for the same person each week.
He loves the job and doesn't want to leave so hence the question as to whether there will be any fallout for him from HMRC if they find out he's not, strictly speaking, self employed?
Forgot to mention that the boss is married to an accountant, so she must be aware that what he's doing is illegal IMHO.
Any advice I can pass on gratefully received.
Edited by P_J_R on Friday 12th November 18:17
Steve H said:
from what I know the boss should be deducting 20% and giving the guy a certificate to show this
I await to be corrected as I am no expert
That doesn't sound totally correct!I await to be corrected as I am no expert
OP: I doubt that your friend would be considered self-employed in the inland revenue's definition of the status. Odds are his boss should be employing the guys and organising things like PAYE and contracts of employment, which is obviously a lot of work!
Shop the chap to the revenue anonymously if your mate doesn't convince him to do the right thing!
Cyberprog said:
Steve H said:
from what I know the boss should be deducting 20% and giving the guy a certificate to show this
I await to be corrected as I am no expert
That doesn't sound totally correct!I await to be corrected as I am no expert
OP: I doubt that your friend would be considered self-employed in the inland revenue's definition of the status. Odds are his boss should be employing the guys and organising things like PAYE and contracts of employment, which is obviously a lot of work!
Shop the chap to the revenue anonymously if your mate doesn't convince him to do the right thing!
d as long as it didn't impact on my mate!If I recall correctly, the guys working for the employer as "self-employed" will fall foul of IR35. That stipulates to be self employed you need to have more than one client plus a few other criteria. If HMRC find out, they will claim back all tax owed retropectively plus a very big fine for them.
I think you need to take a step back here. Everyone is automatically assuming that your mate is an employee. He could actually be considered self employed. HMRC has an online tool where you can input your information and they will provide an indication of whether they believe you to be an employee or self employed -
http://www.hmrc.gov.uk/calcs/esi.htm
This isn't binding but provided the questions are answered truthfully then HMRC should stand by the outcome.
If it is deemed that your friend should be considered an employee, then they will go after the employer for any underpaid PAYE and NIC. Your friend should obviously make it clear to the boss that he believes he should be treated as an employee. The boss may not like this of course and your friend finds himself no longer being used for work.
http://www.hmrc.gov.uk/calcs/esi.htm
This isn't binding but provided the questions are answered truthfully then HMRC should stand by the outcome.
If it is deemed that your friend should be considered an employee, then they will go after the employer for any underpaid PAYE and NIC. Your friend should obviously make it clear to the boss that he believes he should be treated as an employee. The boss may not like this of course and your friend finds himself no longer being used for work.
If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:
Edited to add some interesting reading! http://www.essex.ac.uk/sociology/CRESI/Archive/Eva...
- Can they hire someone to do the work or engage helpers at their own expense?
- Do they risk their own money?
- Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
- Do they agree to do a job for a fixed price regardless of how long the job may take?
- Can they decide what work to do, how and when to do the work and where to provide the services?
- Do they regularly work for a number of different people?
- Do they have to correct unsatisfactory work in their own time and at their own expense?
Edited to add some interesting reading! http://www.essex.ac.uk/sociology/CRESI/Archive/Eva...
Edited by P_J_R on Sunday 14th November 16:06
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