Using SELF-EMPLOYED Workers?

Using self-employed workers doesn't need to be risky

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?

 

Need some tax advice? Give us call!

Calculate how much HMRC could claim against your company so you know whether it is an area that demands your attention.

  • How much do you pay to a typical self-employed subcontractor over the course of the year?
  • From that annual total, take of £5k that is the Employer's NI allowance and then multiply it by 15% (being the employer's NI).
  • Multiply that figure by the amount of workers you have, then multiply that by 6 years. This gives you the figure, that is then subject to penalties and interest which will typically range between 25 and 35% in total.
  • This is forgetting about any tax liability that may be due!


If you are confident the individuals are self-employed why not test the water with us rather than HMRC. You can put your best arguments forward and we can tell you the kind of responses you can expect back from HMRC and see whether you remain confident after.

Call us to make sure you don't have to fear these challenges anymore

How about calculating how much a holiday pay claim could cost? This one is more straight forward

  • Holiday pay is equal to 12.07% of what has been paid to a subcontractor.
  • The individual does not have to demonstrate they are an employee, but a worker which has a lower threshold.
  • Holiday pay can be claimed for the duration of their contract with you, if they have been working for you for say 6 years. The claim can be from that date.
  • Will any such claim open the doors for others.

With such a large potential pay out, no-win, no-fee lawyers and no cost involved with making the claim. It may be a difficult temptation to resist.

Many business owners fear employment related claims more than HMRC. It may not stop at holiday pay either with increasing rights for unfair dismissal, sick pay, SMP/SPP, pensions, failure to provide written particulars and the list goes on.