Family Member Self Employment Problem...
Discussion
You can see I've struggled to title this one!
A very close relative has recently revealed a bit of an employment problem. This might get moved to the jobs and employment matters section, but I thought this was more appropriate to 'law' as it may affect his pension / finances in the long run.
Oct. 2012.
Working for employer who has been a family friend for years. Massive company, on the payroll working as a driver / mechanic to service the fleet of vehicles. Daily mileage becomes too much, so he is offered a 'job' working directly for the family friend managing his estate / grounds. P45 handed out, removed from payroll of the limited company (I have only just found this out).
Fast forward to now.
Has been working 4-5 days a week managing the estate for this friend and getting paid on a daily basis or per-job. Carries out many favours in-between (neither here nor there, but worth a mention). Suddenly there isn't much that needs doing other than maintenance (gardening etc.) so he is reduced to working just 1 day a week. This will not be enough to cover the rent / bills / food for the rest of January.
Now, I always thought he was still classified as an employee of the limited company, but instead was working at the business owners' estate rather than for the company. The reason being that the accountant managing payroll was still sorting out the weekly BACs payments for this new role.
Unfortunately, it appears, he hasn't been issued pucker pay slips and BACs payments aside he is effectively a self-employed handyman. Crucially, this means that he hasn't been paying tax or national insurance.
Due to the nature of the work it is easy to work out that any income he has had won't be taxable, as it will have been significantly less than the ~£10kpa. The only tax year in question being the one where he went from being employed (2012-2013) as he was earning money with the company up until October.
However, he has no proof of income and the National Insurance bit worries me - will it affect his pension fund?
Perhaps it was a bit naive of him, but he fully trusted this person to have been doing everything 'by the book' and thought he was still an employee despite not having any form of contract. As said, he has effectively been working self-employed and hasn't filled out any tax returns etc.
The problem he now faces is that he won't have money for rent come the end of this month.
He will struggle to claim jobseekers or housing benefit because he has no proof of income (would historic bank statements suffice?).
He is also worried that if he pursues his 'employer' / friend any further for the correct paperwork that he will jeopardise any future work required on the estate when the warmer weather arrives.
I'm going to speak to CAB, but I'm really not sure what to do in this situation. Can anyone on PH shed any light?
A very close relative has recently revealed a bit of an employment problem. This might get moved to the jobs and employment matters section, but I thought this was more appropriate to 'law' as it may affect his pension / finances in the long run.
Oct. 2012.
Working for employer who has been a family friend for years. Massive company, on the payroll working as a driver / mechanic to service the fleet of vehicles. Daily mileage becomes too much, so he is offered a 'job' working directly for the family friend managing his estate / grounds. P45 handed out, removed from payroll of the limited company (I have only just found this out).
Fast forward to now.
Has been working 4-5 days a week managing the estate for this friend and getting paid on a daily basis or per-job. Carries out many favours in-between (neither here nor there, but worth a mention). Suddenly there isn't much that needs doing other than maintenance (gardening etc.) so he is reduced to working just 1 day a week. This will not be enough to cover the rent / bills / food for the rest of January.
Now, I always thought he was still classified as an employee of the limited company, but instead was working at the business owners' estate rather than for the company. The reason being that the accountant managing payroll was still sorting out the weekly BACs payments for this new role.
Unfortunately, it appears, he hasn't been issued pucker pay slips and BACs payments aside he is effectively a self-employed handyman. Crucially, this means that he hasn't been paying tax or national insurance.
Due to the nature of the work it is easy to work out that any income he has had won't be taxable, as it will have been significantly less than the ~£10kpa. The only tax year in question being the one where he went from being employed (2012-2013) as he was earning money with the company up until October.
However, he has no proof of income and the National Insurance bit worries me - will it affect his pension fund?
Perhaps it was a bit naive of him, but he fully trusted this person to have been doing everything 'by the book' and thought he was still an employee despite not having any form of contract. As said, he has effectively been working self-employed and hasn't filled out any tax returns etc.
The problem he now faces is that he won't have money for rent come the end of this month.
He will struggle to claim jobseekers or housing benefit because he has no proof of income (would historic bank statements suffice?).
He is also worried that if he pursues his 'employer' / friend any further for the correct paperwork that he will jeopardise any future work required on the estate when the warmer weather arrives.
I'm going to speak to CAB, but I'm really not sure what to do in this situation. Can anyone on PH shed any light?
Eric Mc said:
Was he really ever self employed?
Did he really understand what was being done to him when he moved engagements?
It really doesn't sound much like he was self-employed, does it?Did he really understand what was being done to him when he moved engagements?
A visit to the Citizen's Advice Bureau would be a good idea IMO; if my thinking is correct, he won't be in trouble but his employer probably is.
https://esi2calculator.hmrc.gov.uk/esi/app/index.h...
Here's the HMRC's employment status indicator. I ran through it guessing at to what the answers would be and it came back as "employee". I suggest you do this properly with your friend.
If he is an employee then the tax should have been PAYE, and his employer should have been dealing with it. It's going to be messy, regardless.
Thanks for the input guys,
He attended a meeting at the local CAB office and the information I'm getting back is that "they" were pretty hopeless. I have a feeling he probably asked the wrong questions.
I need to sit him down and have a proper chat with him to establish facts, then, if necessary I will speak with his employer. I'm not confident that he will do it himself.
The family member is my Father in Law I may as well point out. We've joked about having to clear the spare room out but it hopefully won't have to come to that...
He attended a meeting at the local CAB office and the information I'm getting back is that "they" were pretty hopeless. I have a feeling he probably asked the wrong questions.
I need to sit him down and have a proper chat with him to establish facts, then, if necessary I will speak with his employer. I'm not confident that he will do it himself.
The family member is my Father in Law I may as well point out. We've joked about having to clear the spare room out but it hopefully won't have to come to that...
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