If your company engages individuals on a self-employed basis, you are running the risk that HMRC or the worker could challenge this and argue they should be on PAYE.
A lot of companies are broadly aware of this risk, but not the actual scale of the problem. Nor do they believe there is anything they can do about it so just carry on, hoping that it wont become an issue.
If you play with fire, you will eventually get burnt and it is better to be proactive and address this issue, because you can improve your company’s position and ability to defend any such challenge.
Trinity Tax can provide as much or as little assistance as you wish, whether you just want a second opinion, some guidance, a contract drafting or reviewing or your case defending.
How much could it cost?
If HMRC challenged your position, an example of the employer’s National Insurance liability alone is as follows:
20 self-employed people earning an average of £180 per day:
* £125k per year (of employer’s NICs)
* HMRC can go back 6 years so this equal £752k
* Plus interest and penalties – over £1m in liabiliies
This may seem ridiculous, but unfortunately it is the reality of such a challenge. An employment status challenge is enough to put most companies out of business.
Why not deal with this monster lurking in the shadows and ensure you know the law, are compliant and don’t have to fear HMRC?