Taking on a casual freelance 'employee'
Discussion
Bit of a contradiction in terms, I know!
I'd like to take someone on casually for a small number of hours per week. This is for a Ltd company, where I'm currently the only employee. Some of the work they could take away, do and bring back; some would have to be done here (and through trips to Post Office, etc).
I don't want the hassle and red-tape of PAYE/NI/etc. So I'd like the person to submit an invoice which I'd pay, and they'd sort out their own tax/NI via their own self-assessment tax return.
I've done this sort of thing myself as a freelance editor and consultant. Main difference is that this person would be a junior.
Any foreseeable issues with this? Anything I should think abotu now?
I'd like to take someone on casually for a small number of hours per week. This is for a Ltd company, where I'm currently the only employee. Some of the work they could take away, do and bring back; some would have to be done here (and through trips to Post Office, etc).
I don't want the hassle and red-tape of PAYE/NI/etc. So I'd like the person to submit an invoice which I'd pay, and they'd sort out their own tax/NI via their own self-assessment tax return.
I've done this sort of thing myself as a freelance editor and consultant. Main difference is that this person would be a junior.
Any foreseeable issues with this? Anything I should think abotu now?
55allgold said:
Bit of a contradiction in terms, I know!
I don't want the hassle and red-tape of PAYE/NI/etc. So I'd like the person to submit an invoice which I'd pay, and they'd sort out their own tax/NI via their own self-assessment tax return.
If he's an employee, you MUST treat him as such - both legally and from a tax/NI point of view - even if the post is part time.I don't want the hassle and red-tape of PAYE/NI/etc. So I'd like the person to submit an invoice which I'd pay, and they'd sort out their own tax/NI via their own self-assessment tax return.
HMRC will always tell you that the individual's employment/self-employment status is not a matter of choice bit a matter of fact.
55allgold said:
Hi Eric - yes, I've read that at the various HMG Websites. I'm asking about the realities of using a self-employed 'junior'.
To clarify: it would not be their only job, they would invoice me, they would have control over their hours and holidays.
I just don't think "self employment" status is applicable to someone who is looked on as a "junior". The term "junior" is actually shorthand for "junior member of staff".To clarify: it would not be their only job, they would invoice me, they would have control over their hours and holidays.
Many people have more than one PAYE employment. Having multiple jobs in itself is no guarantee that he is NOT an employee.
When you say "they would have control over their hours and holidays" how would that work in a practical sense, specially as the "junior" in a job usually is there to do what they are told - in the sense that they are "beginners" and learning and have very little knowledge or experience to allow them to "control" what they do.
Who would be responsible for the work they do?
Who would fix the work if it went wrong?
Would the "junior" supply his own tools and equipment?
Would the junior take out his own third party insurances?
Could the junior "employ" his own people and send them in as a substitute if he was unavailable for work for any reason?
Would the junior be able to advertise to carry out the type of work he does for you to other businesses, including competitors?
Would you place him under any sort of restrictions regarding work for other businesses, including competitors?
Does he have a separate place of business?
These types of questions would need to be addressed before decidng whether he really was "self employed" or "trading on his own account".
Merely asking him to complete an invoice for the work he has done is literally not worth the paper it is written on when trying to argue "self employment" status.
Agree on all of the above. However...
Right now, there are many thousands of freelance workers working in a junior capacity in many areas of business. For instance, there are junior designers, junior writers and junior editors helping to pump out magazines for very big publishers (my old area of business).
But they commute day-in, day-out, sit at the company's own equipment, are told what to do by the publisher/editor and work full-time right alongside salaried staff doing comparable work.
So it can be - and is - done. on a large scale. Some of these people were affected by the IR35 clampdown and went out and got extra clients so that it was clear to HMG that they were not working for a single employer.
It's just the same arrangement in another area of business that I'm considering.
Right now, there are many thousands of freelance workers working in a junior capacity in many areas of business. For instance, there are junior designers, junior writers and junior editors helping to pump out magazines for very big publishers (my old area of business).
But they commute day-in, day-out, sit at the company's own equipment, are told what to do by the publisher/editor and work full-time right alongside salaried staff doing comparable work.
So it can be - and is - done. on a large scale. Some of these people were affected by the IR35 clampdown and went out and got extra clients so that it was clear to HMG that they were not working for a single employer.
It's just the same arrangement in another area of business that I'm considering.
HMRC can be very inconsistent in their approach to tackling "self employed" status cases. Often, their approach is dictated by what is the "norm" for a particular industry.
Freelancing is a recognised format in the media and entertainment world. It is not so well recognised in (say) engineering or retail.
At the end of the day, as the "employer" of this individual, it is YOU who will carry the can if HMRC ever do come calling and decide you have handled the situation incorrectly. It is YOUR business that will have to find the underpaid PAYE and underpaid Employee's and Employer's NI. So, what dictates your final decision will be your atitude to risk.
Conversely, the "employee" has nothing to worry about - from a tax or NI point of view, providing he completes his Self Assessment tax returns correctly and signs up for Class 2 NI contributions.
What age is he/she and dos he/she understand what you are asking of him/her?.
Freelancing is a recognised format in the media and entertainment world. It is not so well recognised in (say) engineering or retail.
At the end of the day, as the "employer" of this individual, it is YOU who will carry the can if HMRC ever do come calling and decide you have handled the situation incorrectly. It is YOUR business that will have to find the underpaid PAYE and underpaid Employee's and Employer's NI. So, what dictates your final decision will be your atitude to risk.
Conversely, the "employee" has nothing to worry about - from a tax or NI point of view, providing he completes his Self Assessment tax returns correctly and signs up for Class 2 NI contributions.
What age is he/she and dos he/she understand what you are asking of him/her?.
Understood about the inconsistency of HMRC for some areas of business. I know that the labourer who did my extension was self-employed, despite always working for the same builder and always doing what he was told. He had no tools of his own and just turned up in his overalls every morning. An 'employee' in all of the aspects you mentioned above.
For this role, I do not yet have a person in mind yet. S/he is likely to be middle aged, very local and must already be self employed.
And the whole area is up for discussion at next week's meeting with my accountant.
For this role, I do not yet have a person in mind yet. S/he is likely to be middle aged, very local and must already be self employed.
And the whole area is up for discussion at next week's meeting with my accountant.
fido said:
Interesting thread. What if you wanted to pay someone to do a specific task i.e. i need X,Y,Z done - payment on completion. Is there no such way of agreeing through a contract or would the freelancer have to set up an limited company?
A one off task related engagement is much more likely to succeed in any dispute as to whether waqs an employee or self employed. It's the old "was it a contract of service or a contract for services?" debate.Hiring someone on a continuous basis - even part time - hints at the situation being a part time employment, not some being hired on an ad hoc "needs" basis.
RemainAllHoof said:
Is IR35 relevant here?
Yes - tangentially. I mentioned it above. I know it was aimed at computer and IT-related contractors, but it also affected freelancers in the publishing industry. As Eric says, there are very odd ways that HMRC decides on these things. Mine is the classic problem of a one-man-band getting to the point where there aren't enough hours in the day, but where employing someone formally is not feasible.
Having digested the thoughts above, I think my aim is to find someone who is already properly self-employed, and to whom the work is naturally and realistically sub-contractable.
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