I have a degree in Accountancy from nearly 20 years ago however never pursued certified Accountancy after Uni. That's the basic background.
My brother started an online business 4 years ago and he asked me to help him out with his books and for the first couple of years made pretty modest profits - £3k year 1, 4k year 2, £16k year 3 and this year his profits will be in the region of £30K. Each year he has roughly doubled Turnover and this year also had to go VAT registered. I have always done this as it wasn't a lot of work and he only wanted year end accounts done. However this year with him hitting VAT registration limits and with last year accounts due in Jan past and him moving to Sage Accounts I spent a considerable amount of time setting up Sage, Getting his first VAT return done and getting his year end accounts done. The Bank Recs are extremely time consuming with over 7,000 lines alone on PayPal. Again I took no money for this however I made it plain that the volume of work was far too much to be unpaid and that going forward he would have to find someone else to do the work or pay me. He is more than willing to pay me.
My preference and his is that I go Self Employed as I will only end up having to do the PAYE which I really don't want to get into and he doesn't want the hassle of employment contracts, etc. It really is much simpler if I just register for Self Employment and pay my own tax however my question is really how do I go about ensuring that HMRC does not recognise me as an Employee.
I've check out HMRC Employment Status info and the Employee Questions are:
Do they have to do the work themselves? I could get someone else to do the work though I'd have no intention of doing that
Can someone tell them at any time what to do, where to carry out the work or when and how to do it? No. I have my own daytime job and fit this round my own hours
Can they work a set amount of hours? Yet to be agreed
Can someone move them from task to task? No. He can ask me to take on additional book keeping work however that's my decision whether to accept or not
Are they paid by the hour, week, or month? Possibly by the hour though could be on fixed rate. To be determined.
Can they get overtime pay or bonus payment? No
So I'm not answering yes to everything so I guess that could indicate I can be viewed as Self Employed.
On the Self employed Questions my answers are:
Can they hire someone to do the work or engage helpers at their own expense? Yes though highly unlikely
Do they risk their own money? Very marginally. My expenses are minimal to say the least therefore the risk is near zero
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? Everything bar Sage Accounts. I use my borther's software which resides locally on his computer and remotely access it. All the anlysis in Access/Excel/LibreOffice are done on my computer using my equipment. I have my own office and all my own office equipment and stationery. All expenses incurred by me are paid me.
Do they agree to do a job for a fixed price regardless of how long the job may take? No. My borther will have pay proportionate to the work involved.
Can they decide what work to do, how and when to do the work and where to provide the services? It is my choice whether I undertake any and all work. I decide when I will do the work though as I'm accessing his pc for Sage there is an element of cooperation.
Do they regularly work for a number of different people? No and no desire to do so, at least at this moment in time though I have two other brothers who are self employed in the building trade so their accounts are fairly simple so conceivably I could do these.
Do they have to correct unsatisfactory work in their own time and at their own expense? Most certainly. I make a mistake I can't bill him for me spending time correcting it.
My answers are pretty much yes to all so that again indicates Self Employed would be my status. Still I'm wholly convinced that this is how HMRC would see it. Your advice would be appreciated and sorry for the very long initial post.
Good Morning (sorry, don't know your name but welcome to the forum).
Many bookkeepers start out servicing relatives and / or close friends. Thar doesn't mean that they are not self employed.
Everything that you do needs to be geared towards being a self employed bookkeeper.
You must register for MLR which will cost you £110 per year through HMRC. Without that you are not a self employed bookkeeper.
PII is probably not necessary in this instance but as soon as you get your first client beyond your brother it is advisable.
With HMRC's list you need to think about things from HMRCs perspective. They come out with lists such as this which would seem to be a set of rules but the reality is a principles based system where they look at the commercial reality of the arrangement not just whether tha tax payer was able to tick the right boxes.
First thing that would occur to a tax inspector is whether this is a tax dodge as your brother will be expensing your fee's moving the tax liability from his books to yours which may (or may not) be at a different tax rate.
Your fee's must be fair but not extortionate. Maybe if you base them on a charge rate of around £15 per hour?
Being registered for MLR, advertising your services, treating your business as a business will all work in your favour but not as much as having a few more clients.
Good luck with the business and if there is anything that we can do to help then please do not hesitate to post your questions on here,
kind regards,
Shaun.
p.s. completely concur about PayPal statements. They're awful especially where they have foreign currency translation with the sterling amount that you want on a different line to the company being paid or making payment. At least Excel makes getting the number of lines down to the real level not too bad (4 lines for the currency translation gets changed to the sterling amount overlaying the converted amount and the other three lines getting removed (from a copy, never the original)
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
please could you offer any advice on the site for the benefit of all readers (only a very small number of our readers post) rather than directing readers off the site where others are unable to comment on whether the advice being given is the best for the poster.
Sure that your advice is great and I'm not making any comment about that, only simply that unless there are legal or professional reasons to take posts offline such is not condoned.
I've removed the link that you posted (changed it to PM me) as such would appear as advertising / SEO work which is not allowed on the site (although we turn a blind eye for long term posters who have offered advice to others on site), however, you can still supply an email address in your profile where posters are able to Private Message you. (on settings where it says "Email visible to other members" choose the option "No, accept email anonymously" and you can get messages without your email being published on the site).
Welcome to the forum though, sorry that the first reply you got was this one but I do very much liook forwards to chatting in the coming months,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
