self-employed or employee
Discussion
Some advice please.
I have an opportunity to do some consulting essentially for the government via a 3rd party supplier - the area is education, The Department for Education have commissioned 3rd party suppliers to recruit and deploy specialist consultants, Typically these would be in existing employment in schools, but they could be self-employed.
I would fall in the later category, but as yet I'm not registered as self employed.
However, I've filled this in https://www.tax.service.gov.uk/check-employment-st... pretending to be self-employed - getting work deployed to me via the 3rd party. Assuming I've filled this in correctly it suggests that for tax purposes I'm the employee of the 3rd party supplier.
To be fair, I'd prefer this as I'd not have the hassle of setting up as self-employed and getting all relevant insurances in place.
If I need to be self-employed can anyone recommend the best/easiest way to do this?
TIA
FG
I have an opportunity to do some consulting essentially for the government via a 3rd party supplier - the area is education, The Department for Education have commissioned 3rd party suppliers to recruit and deploy specialist consultants, Typically these would be in existing employment in schools, but they could be self-employed.
I would fall in the later category, but as yet I'm not registered as self employed.
However, I've filled this in https://www.tax.service.gov.uk/check-employment-st... pretending to be self-employed - getting work deployed to me via the 3rd party. Assuming I've filled this in correctly it suggests that for tax purposes I'm the employee of the 3rd party supplier.
To be fair, I'd prefer this as I'd not have the hassle of setting up as self-employed and getting all relevant insurances in place.
If I need to be self-employed can anyone recommend the best/easiest way to do this?
TIA
FG
What you've described is effectively you being a freelance consultant. And you need to be careful.
The HMRC are clamping down on cases where companies are hiring freelancers when they shouldn't be. From the HMRC website, the checks are as follows:
Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
they can decide what work they do and when, where or how to do it
they can hire someone else to do the work
they’re responsible for fixing any unsatisfactory work in their own time
their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish
they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
they can work for more than one client
The weight of responsibility rests with the company rather than you so as long as you declare and pay your tax and NI any comeback will be weighted towards them rather than you.
The HMRC are clamping down on cases where companies are hiring freelancers when they shouldn't be. From the HMRC website, the checks are as follows:
Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
they can decide what work they do and when, where or how to do it
they can hire someone else to do the work
they’re responsible for fixing any unsatisfactory work in their own time
their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish
they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
they can work for more than one client
The weight of responsibility rests with the company rather than you so as long as you declare and pay your tax and NI any comeback will be weighted towards them rather than you.
You can't "be" self employed in fact you count as an employee in law........
The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
Many thanks
In my case then:
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit - No that is for 3rd party
they can decide what work they do and when, where or how to do it deployment is 3rd party responsibility to assign whilst I could refuse work, I don't drum up the work
they can hire someone else to do the work I cannot do this, all I could do is refuse the work, 3rd party would deploy some one else
they’re responsible for fixing any unsatisfactory work in their own time 3rd party is responsible to the client for the quality of the work
their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish it is an agreed day rate, end client specifies length of deployment to the 3rd party
they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work I can claim travel/subsistence , put provide basic stationary and laptop etc myself. No specialist tools/equipment required
they can work for more than one client yep I'm free to work for anyone else, but have to commit to a set number of deployments per year
In my case then:
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit - No that is for 3rd party
they can decide what work they do and when, where or how to do it deployment is 3rd party responsibility to assign whilst I could refuse work, I don't drum up the work
they can hire someone else to do the work I cannot do this, all I could do is refuse the work, 3rd party would deploy some one else
they’re responsible for fixing any unsatisfactory work in their own time 3rd party is responsible to the client for the quality of the work
their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish it is an agreed day rate, end client specifies length of deployment to the 3rd party
they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work I can claim travel/subsistence , put provide basic stationary and laptop etc myself. No specialist tools/equipment required
they can work for more than one client yep I'm free to work for anyone else, but have to commit to a set number of deployments per year
Jasandjules said:
You can't "be" self employed in fact you count as an employee in law........
The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
I think that would class a lot of IT Contractors who regard themselves as self-employed to be "employees".The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
Countdown said:
Jasandjules said:
You can't "be" self employed in fact you count as an employee in law........
The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
I think that would class a lot of IT Contractors who regard themselves as self-employed to be "employees".The generally accepted expression was set out by MacKenna J in Ready Mix v Minister of Pensions as:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. … Freedom to do a job either by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be".
There is caselaw setting out each of the three points but they tend to be fairly "obvious" as such.... I should also add that more recent cases have narrowed further this remit - i.e. pimlico plumbers found that even where a plumber could substitute another pimlico plumber this was not enough to avoid being self employed because if you were truly self employed you could essentially substitute whoever you wanted....
Before you start bandying the expression "Self Employed" about you need to be 100% clear what you mean by the expression.
There is genuine self employment which is an individual running their own business as a person.
And then there is the situation where somebody operates through an intermediary organisation - usually a limited company.
It is the latter situation which is directly affected by all the recent changes to how IR35 is applied. IR35 has no bearing AT ALL on a person who is genuinely self employed i.e. a sole trader.
OP, you have mail.
There is genuine self employment which is an individual running their own business as a person.
And then there is the situation where somebody operates through an intermediary organisation - usually a limited company.
It is the latter situation which is directly affected by all the recent changes to how IR35 is applied. IR35 has no bearing AT ALL on a person who is genuinely self employed i.e. a sole trader.
OP, you have mail.
Countdown said:
I think that would class a lot of IT Contractors who regard themselves as self-employed to be "employees".
Yes indeed. There are many, many roles where "Contractor" and/or "self employed" people are as such in name only. If you want to know how far the court will go to determine and employer... Read this for fun
http://www.bailii.org/uk/cases/UKEAT/2017/0056_17_...
Interesting article on the problems with the HMRC "employment/self employment" online test -
https://www.contractorcalculator.co.uk/cest_fracti...
https://www.contractorcalculator.co.uk/cest_fracti...
Thanks for all the advice thus far. My situation has changed a bit.
The opportunity for contracting is now a more longer term aim, which if it ever comes off will mean I will set up a limited company etc. But that is a way off now.
However, in the very short term I may get a few days work here and there supporting a multi academy trust. Now this will only be the odd day here and there charged at a day rate.
What do you think is the easiest and least risk approach to getting paid?
Umbrella Company (like Brookson One etc) for PAYE - but then I'd need professional indemnity insurance? Is this costly for what may be only £1-2K of work in the short term?
Or
Become employed and have a zero hour contract with the company so they deal with any PAYE and insurances?
Cash in hand would not be appropriate.
TIA
FG
The opportunity for contracting is now a more longer term aim, which if it ever comes off will mean I will set up a limited company etc. But that is a way off now.
However, in the very short term I may get a few days work here and there supporting a multi academy trust. Now this will only be the odd day here and there charged at a day rate.
What do you think is the easiest and least risk approach to getting paid?
Umbrella Company (like Brookson One etc) for PAYE - but then I'd need professional indemnity insurance? Is this costly for what may be only £1-2K of work in the short term?
Or
Become employed and have a zero hour contract with the company so they deal with any PAYE and insurances?
Cash in hand would not be appropriate.
TIA
FG
FunkyGibbon said:
Thanks for all the advice thus far. My situation has changed a bit.
However, in the very short term I may get a few days work here and there supporting a multi academy trust. Now this will only be the odd day here and there charged at a day rate.
What do you think is the easiest and least risk approach to getting paid? (snipped for brevity)
The easiest soultion is to operate as Sole Trader. Will the Trust allow this? You would avoid any IR35 issues & the administration is relatively simple. However, in the very short term I may get a few days work here and there supporting a multi academy trust. Now this will only be the odd day here and there charged at a day rate.
What do you think is the easiest and least risk approach to getting paid? (snipped for brevity)
Mr Pointy said:
The easiest soultion is to operate as Sole Trader. Will the Trust allow this? You would avoid any IR35 issues & the administration is relatively simple.
Thanks. From .GOV site:Gov said:
You need to set up as a sole trader if any of the following apply:
you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
It is possible that the short term work may be <£1,000 between now and April - does that mean I can just pocket all the money and not pay any tax or NI?you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
thanks
FunkyGibbon said:
Mr Pointy said:
The easiest soultion is to operate as Sole Trader. Will the Trust allow this? You would avoid any IR35 issues & the administration is relatively simple.
Thanks. From .GOV site:Gov said:
You need to set up as a sole trader if any of the following apply:
you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
It is possible that the short term work may be <£1,000 between now and April - does that mean I can just pocket all the money and not pay any tax or NI?you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
For insurance try Caunce O'Hara
https://www.caunceohara.co.uk/
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