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Employment status

Whether someone is employed or self is not as simple as it might seem at first sight. Many people assume it is free to choose, but this is not the case.

Although there is no clear answer as to how you decide if self-employed or not, the following must be on your list

Critical factors to consider:

  • Control
  • The right to obtain a substitute or helper to do the job
  • Mutuality of obligations.

Other factors to consider:

  • Provision of equipment
  • Financial Risk
  • Base pay
  • Opportunity to benefit from good management
  • Part of the organisation
  • Right of dismissal
  • Employee Benefits
  • Intention of the parties
  • Duration of the contract.

These are often issues of labour law in general and not specific tax legislation. There is a huge amount of case law in this area and HMRC are not always right. HMRC do not have the final say on whether someone is self-employed or not. We can discuss your case and take it to the commissioners of taxes for you.

The cost, if you’re wrong is enormous. Not only is there the issue of workers and employers national insurance, being classified as an employee, also leads to all kinds of labor rights such as holiday pay, maternity pay, unfair dismissal etc. The decision must be made by the employer and, if you mess it will be very difficult to recover back taxes, interest, penalties, etc. by the worker.

We can review your current system and give you our opinion as to whether will face attacks from the Taxman. We can help advise on contracts for services to help and advise on how to maximise your chances.

More in this category: « Contractors & IR35 Personal Tax »

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