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False self employment - are you at risk

False self employment - are you at risk
Paul Chappell
Written by Paul Chappell
Monday, 27 January 2014 11:50

As you may be aware, HMRC are currently in a consultation period (to end on 4th February) looking at the ‘engaging’ of self employed workers by onshore employment intermediaries who seek to ‘disguise’ the employment of workers as self employment.

The obvious driver for HMRC is the deemed avoidance of National Insurance Contributions.

HMRC’s proposals do not cover Limited Companies working through intermediaries, IR35 legislation is already in place to recover PAYE and NIC.

The proposed legislation will concentrate on control, which has always been one of the central themes of employment status. It will focus on whether the worker is subject to or has the right of, supervision, direction or control as to the manner in which the duties are carried out. Control for the purpose of the legislation will mean that anyone is able to exercise control, or have the right to exercise control about how the work is carried out.

Other factors will also be considered such as the worker being able to decide when or where to carry out the work, but these on their own will not be sufficient to bring someone within the legislation. So if a worker has to carry out their work between certain hours because, for example, this is the only time that the site is open and has to carry out the work on site, but can decide how to do their work and beyond complying with the specification there is no checking of the work, then they would be outside of the legislation. However, if someone is able to supervise and could ask for the work to be done in a different way or different work to be done then the worker would be within the legislation.

There is a fine dividing line therefore, however it will be the responsibility of the intermediary that contracts with the end client to consider, and if appropriate, operate PAYE and NIC in respect of the worker they place. Of course the normal penalties will follow if the intermediary gets this wrong.

It is early days, however history has suggested that HMRC’s proposals for consultation tend to come into force with very little amendment. I will update further when more information is released following the consultation period.

 

Paul Chappell

Paul joined Dataplan from HM Revenue and Customs in 2007 and runs our PAYE compliance and investigation services.

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