How comfortable are you with hiring subcontractors instead of PAYE security staff? Do you trust your tax advice? The penalties can be crushing When was the last time you checked the rules?
AXLR8 provide payment processing streams of PAYE staff and Subcontractors as part of our workforce management package. Our clients commonly use both, perfectly legally. However, a client may use entirely S/E or entirely PAYE. Agencies that have used self-employed subcontractors or even teams from other employers need to be clear on the HMRC current definitions and practice as it evolves.
HMRC
HMRC’s goal is to collect revenue to pay for our public services.
In business, our goal is to make a profit.
HMRC are working steadily to find more and more people defining workers as subcontractors. They then claim that the workers are employees and should have been on PAYE.
Often the advice from so called ‘experts’ is comforting but incorrect.
Many directors of staffing companies we come across in the industry believe that if a member of staff says they are working self-employed and have a UTR and several clients, they can just call them self-employed. Sometimes they are right and sometimes they are just deluded with more and more people joining their books as self-employed every year. Regrettably, it is often the successful staffing agencies winning repeat business that are most at risk. As the rules evolve, the same persons are used more regularly. at the same places. This can strengthen the HMRC argument.
The Dog Handler Case
One specialist authority is the author (Rebecca Seeley Harris) of this detailed article about a security company who had to find £88k for the HMRC when the decision went against them.
There is much to learn from the ‘show cases’ like this one where dog handlers were claimed to be a unit and HMRC was able to argue successfully that the dog was like piece of specialist equipment operated by trained personnel. Thus the security staffing agency was held to be the employer of the staff for PAYE purposes. The words the agency used to describe the relationship did not help them avoid the back tax. This is the case across many industries where our clients deploy staff and resources: security and stewarding at events, safety surveys, experiential, field marketing and merchandising, retail, airports and care workers.
Further advice
Rebecca is considered to be one of the leading authorities on employment status in the UK. You can contact her at at Re Legal Consulting Ltd www.relegalconsulting.co.uk.