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is my freelance designer self employed or employed?
Can anyone enlighten me of the latest ruling on the above – we have a freelance graphic designer who comes into our premises twice a week to do designs and keeps the machines running and also another local signmaker who is short of work who comes in twice a week to make and fit the signs – now question is although they run there own company does the law say they are self employed or employed
im sure were ok to continue but i also dont want to fall short of the taxman
colin
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10 Replies
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all three of you should be self employed, unless your taking a wage via PAYE (tax and NI) and possibly have other partners in the business.
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The way I see it Colin is that as they both run their own Companies, they are subcontractors to you. They must invoice you for the services they provide.
Now there is something to do with the number of hours they work, as if it can be proven that the majority of their working hours are for you then technically they should become employees (not 100% on the law regarding this one).
If your an FSB member, consult the legal line and they will advise you (thats what you pay your subscriptions for!).
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All 3 self employed and as above, they should be invoicing you for a service or their time, unless its cash :lol1:
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im self employed for 4.5 yrs
one used to work for me for two years and then decided to go alone – i offered him 2 days to get him going hes been there 7 months since
he gives us an invoice every monththe other has been self employed for a few years now and work is short and i offer him 2 days per week and again he invoices me every week
its working well at the moment – fingers crossed
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It’s a minefield, and the Revenue can make whatever judgement they like. Unless challenged, when they might back down. Nevertheless, it can be a long winded and expensive exercise to get them to do that, with no guarantee of success.
Amongst the things they take into account are:
How many hours a week does the subbie work for you?
Are they exclusive? ie, do they have other customers?Then the biggie – is the work you give them exclusive to them personally, or can they send another person in their stead? If the latter, then you should be bombproof. If the former, then the Revenue have a good case for the person being an employee.
added on edit: never forget that it is easier for the Revenue to collect tax from an employee than a self employed person. Therefore they will go to great lengths to classify anybody they possibly can as an employee. Get it wrong and YOU will end up paying the difference.
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quote John Childs:is the work you give them exclusive to them personally, or can they send another person in their stead? If the latter, then you should be bombproof. If the former, then the Revenue have a good case for the person being an employee.So an artist or a designer cant be self employed then?
not sure I understand your argument John,I have always thought the self employed rule applies to anyone who is free to offer their services to anyone, exclusivity isnt a reason to be employed, by the purchaser of the service.
In Colins case, I would say its clear cut, they provide a service on an ad hoc basis. so an invoice will keep Colin in the clear
Peter
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unfortunately as i understand it from experience john is quite correct.
if the other 2 invoice other people for there services should be ok.
but because they come to you on a regular basis and may not invoice others needs more investigationchris
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Well this is how the government define it
http://www.direct.gov.uk/en/MoneyTaxAnd … DG_4015975Peter
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Oh, it is Peter. If I employ someone continuously for twelve months, then I would have great difficulty in arguing that they weren’t an employee. Then the Revenue could look to me to pay their NHI contributions and Income Tax. And they would probably win an expensive court case.
On the other hand, if that same self employed person worked for me themselves for only twelve of those fifty two weeks, and sent one or more substitutes for the other thirty weeks of the year, then my case would be a lot stronger.
The Revenue have many criteria on which they decide employment status, and some carry more weight than others, but the final decision always rests with the Revenue themselves. Get it wrong and, even if you are right, it is going to cost a lot of money to prove your case. Even then, there is no guarantee of success. Tread warily.
In Colin’s case, at two days per week, I agree that he will probably be fine. And if the "employee" also does work for other people on the other days of the week. then I would suggest that Colin is bomb proof.
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quote Peter Normington:Well this is how the government define it
http://www.direct.gov.uk/en/MoneyTaxAnd … DG_4015975I think that sums up what I was trying to say.
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