’employing’ self employed staff?
With all the cost and responsibility of employing staff under PAYE and now pension costs, it is understandable that consideration is given to self-employed staff. However, if you are not careful there could be a horrendous financial sting in the tail!
We are aware of a pub where most of the staff were ‘self-employed’ and they had a visit from HMRC which resulted in a liability of over £15000 in back dated, tax, national insurance contributions, penalties and interest. So their saving resulted in additional costs for both the employer and employee.
It is the engagers (you) duty to decide on whether a person is an employee or self-employed and if you decide a person is self-employed then at the very minimum:
- You will need an invoice from them with every payment.
- They must have their UTR (unique tax reference) on that invoice)
- They will not be working for you exclusively so the numbered invoices will not be sequential.
By following 1-3 this may prove to HMRC that you have done all you reasonably could to satisfy yourself that the person is genuinely self-employed, but is not guaranteed.
If a person works regular set hours every week under your supervision and has no other job then it would be difficult to show that they are not an employee, so paying them as self-employed may save money now, but could be a financial time bomb ready to explode.
- Realistically, all your staff should be on payroll.
- A few self-employed may be reasonable providing the above 1-3 are done.
- Having all staff as self -employed is a financial time bomb, we would not recommend doing so.
For further information, please get in touch with a member of our team today on 01255 850 002