I have a bit of a delicate issue which I'm trying to decide how to tackle.
I have a friend of a friend with a building company which has his own accountant but has passed a great deal of work my way. Charities, local businesses he's involved in and many contractors who work for him etc.
Some of these are straight forward with no problem at all but a few of the contractors I have been dealing with for a year or two and it appears obvious that they only work for him and should therefore actually be employed.
My thoughts are that I point this out to the contractors who will then of course speak with business owner. I am assuming that his own accountant has suggested this is ok! I don't really want to upset the balance anywhere but I can't really go to the business owner as he isn't directly my client but can't really overlook this either.
Any thoughts with how I can deal with this professionally and without upset would be greatly appreciated.
Thanks
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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.
Any thoughts with how I can deal with this professionally and without upset would be greatly appreciated.
Thanks
Hi Val.
It's a very grey area, even more so where CIS is involved. Ultimately the responsibility lies with the contractor, so if HMRC do show concern, it is him that would be penalised in the event of wrong status. Maybe a gentle word about whether he is aware about the status of the subbies. I wouldn't mention it to the subbies though, if the contractor thinks they are disgruntled he may look to replace them. Sometimes the subby has no choice, as was the case with a new client who I took on last year, who could only work on a self employed basis, despite being previously employed by the same firm.
One thing to watch out for is the 2 year travel allowance rule, but I guess your subbies will be working on different sites throughout the year.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi Valerie
Not sure what angle you are looking at this from, perhaps you can expand.
Tax. Employment law. Can be two separate things.
Are you thinking IR35? N/a if self employed.
That said having all their eggs in one basket is a dumb thing to do. Suggest the Accountancy bodies rules of no one client more than 15% of T/o is eminently sensible for any business owner.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Many thanks John & Joanne for your replies.
The situation I have here is that business owner is evidently avoiding payroll & all the ni/ pension requirements in taking these people on as self employed. In some circumstances they are doing small amounts of work for others too so it is not applicable but in 2 cases they have only ever worked for this one company and they would be deemed as being employed with their circumstances.
I hadn't thought about the risk of the guys losing work by speaking with the business owner which would be a possibility and as you suggested John, the liability would actually lie at the top so I may just avoid that conversation.
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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.
Sadly within the construction industry thats the way it is, if you want the work then you need to be self-employed.
I know subbies who have been working for the same contractor for over 30 years and who are on a day rate with have company vans but it has always been the same, HMRC did try to crack down on it but the majority of contractors still operate in this fashion
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Thanks Doug
I'm possibly over thinking and over worrying.
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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.
HMRC should have dealt with the self employed at the same time they started to deal with the IR35 issue. They probably think there is not an issue - just like they think there are not many margin scheme VAT clients (their words!)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
HMRC should have dealt with the self employed at the same time they started to deal with the IR35 issue.
I couldn't agree with you more. There needs to be a serious review of the gig economy, which is vastly abused by unscrupulous businesses, some of whom are large companies.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
The question for margin scheme, of course, is what do they mean by "not many". They cannot know and some people might only use the margin scheme for a transaction every so often.
Having only 1 client does not mean someone should employed. Its just one of the many areas that should be looked at. HMRC have lost every case on MOO.
HMRCs definition of MOO. (mutuality of obligation)
In its Employment Status Manual, ESM0543 Guide to Determining Status: mutuality of obligation, HMRC says that:
There must be an irreducible minimum of mutual obligation for there to be a contract of service. That irreducible minimum is
that the engager must be obliged to pay a wage or other remuneration, and that the worker must be obliged to provide his or her own work or skill.
If the worker can choose not to turn up to work on any day then they are not obliged to provide his or her own work or skill - there is no MOO!
An employee is someone who can turn up for work, and is paid to do a task, even if there is no task to do!
Useful, thanks Frauke. I was just thinking this morning about the one client who I work at the premises for one day a month, should I really be IR35? I do use their computer and software, but I have no set day or time, and can choose what hours I work, as it is a fixed monthly price.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
A couple of other key points to consider, which is kind of why I asked the question originally as to what was driving this albeit original Q was not IR 35 related (but I wasnt sure if Valerie was wondering if that needed to be considered).
Things such as, just a couple of egs - who puts the work right if you fuch it up? If an employee messes it up they dont need to put it right in their own time/at their own expense. If you would, at your expense - leads towards not being an employee.
- right of sending in a replacement if you are on holiday/off sick etc. Have you done this/do you do it/can you do it? I have sent my son in to cover for me (on my payroll as required). Again therefore not an employee. Could you send in your data inputter?
Have you waded through the IR 35 calculator? I havent, might try it! Although we know that answers swerve towards HMRC's aims, but its as good a place to start as any.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Things such as, just a couple of egs - who puts the work right if you fuch it up? If an employee messes it up they dont need to put it right in their own time/at their own expense. If you would, at your expense - leads towards not being an employee. - right of sending in a replacement if you are on holiday/off sick etc. Have you done this/do you do it/can you do it? I have sent my son in to cover for me (on my payroll as required). Again therefore not an employee. Could you send in your data inputter?
Have you waded through the IR 35 calculator? I havent, might try it! Although we know that answers swerve towards HMRC's aims, but its as good a place to start as any.
Wahey, I passed the IR35 both times. First I tried it with being able to send in a substitute, then I tried it without, and because the client can't dictate how or when I do the work I passed again.
To answer your questions, any fuch ups would be down to me to put right at my own expense. I'm not sure whether I could send a replacement but I can't see it being a problem. My data entry person could do the bank rec, and the paypal reconciliation if I showed her, but wouldn't be able to do the VAT return side or the year end accounts. (client does the purchase invoices and the cash sales)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
