Self employed or employee

[Cyclone]

If they are paid gross then are they counted as a sole trader? And shouldn't they be completing tax returns, buying indemnity/professional insurance, invoicing their client, etc...

[taxman]

If they are paid gross then are they counted as a sole trader? And shouldn't they be completing tax returns, buying indemnity/professional insurance, invoicing their client, etc...

 

They should....but some don't.

 

And even if they did HMRC might still query it (due to the loss of employer's NI)

[Balpin]

I remember what we used to call 'Self Employed on the Books'

It was great for us Works Engineers, as we only needed to call one firm, and he would send out all his men as required.

These men were 'self employed' but were actually employed by the bloke.

No tax, no NI, but they got a good kickback from it.

John Major stopped it, and it made everyones lives harder.

 

It is strange that Major was the one who also introduced Incap, on Thatchers orders, I wonder how many of those hard wording men claimed that instead?

[NorthernStar]

Up until a couple of years back I used to operate as a ltd. company and got a great deal of my jobs through agencies; this was a very tax efficient way of working and I was aware of people working more like employees doing the same.

 

Perhaps your colleague might benefit by doing the same if his work isn't permanent, it's a bit faffy but would benefit all involved. It sounds like this colleague is getting the worst of both worlds as it stands.

[taxman]

Up until a couple of years back I used to operate as a ltd. company and got a great deal of my jobs through agencies; this was a very tax efficient way of working and I was aware of people working more like employees doing the same.

 

Perhaps your colleague might benefit by doing the same if his work isn't permanent, it's a bit faffy but would benefit all involved. It sounds like this colleague is getting the worst of both worlds as it stands.

 

As long as you can avoid falling foul of the IR35 rules, which isn't difficult seeing as even high ranking HMRC officials can get away with it.

 

"The Mail on Sunday have revealed that one senior official working for HMRC received almost £150,000 for just three months’ work – all paid through his company, Orwell Consulting.

 

The official, Deepak Singh, had previously been earning £160,000 as an employee under the conventional PAYE system, and paid full income tax of up to 50 per cent from 2006 to 2009.

 

In 2009, he moved job to become acting chief information officer and began to be paid as a temporary arrangement through his company."

[NorthernStar]

As long as you can avoid falling foul of the IR35 rules, which isn't difficult seeing as even high ranking HMRC officials can get away with it.

 

"The Mail on Sunday have revealed that one senior official working for HMRC received almost £150,000 for just three months’ work – all paid through his company, Orwell Consulting.

 

The official, Deepak Singh, had previously been earning £160,000 as an employee under the conventional PAYE system, and paid full income tax of up to 50 per cent from 2006 to 2009.

 

In 2009, he moved job to become acting chief information officer and began to be paid as a temporary arrangement through his company."

 

Looks to me like Mr. Osborne wants everyone to have the worst of both worlds in as much as he wants both a hire and fireable workforce, I reckon he'd be better off making everyone operate as freelancers thereby removing the need to prosecute people - though I guess as a Tory politician he'd favour nasty and punitive measures.

 

I do however think that the tax system is pretty naff, the PAYE system is sickening beyond belief in comparison to a freelancers ltd co. status. Perhaps Mr. Osbourne should be looking at the tax system as a whole and not just little bits of it - it seems to be full of loopholes but I suspect as a Tory politician he's in favour loopholes that suit him and his dodgy, corrupt mates.

 

....but still if he keeps going the way he is money wont be worth the space in your wallet before long anyway.

[Mecky]

He is the employee of a contractor. If the contractor is classed as a limited company, everyone who works for the company is an employee because a limited company is a seperate entity in its own right.

[ricgem2002]

If they are paid gross then are they counted as a sole trader? And shouldn't they be completing tax returns, buying indemnity/professional insurance, invoicing their client, etc...

he does fill in a tax return but regarding invoicing clients etc he dosent .he fills a time sheet in regarding the hours worked this then gets signed off by our company which he then takes back to the agency for them to process it and he gets paid the following week .

[becky_s]

after working for the company for 12 weeks they are supposed to have the same rights as an employee according to this website http://www.direct.gov.uk/en/Nl1/Newsroom/DG_199272

 

Not strictly true.

 

They are entitled to receive the same employee benefits compared to equivalent employees at the same place of work. They don't achieve employee status, which is a separate legal point. So they still dont have full employment rights, merely enhanced agency worker rights. You could work through an agency for ten years, but still not be able to claim unfair dismissal if you were sacked.

[Gram?]

Not strictly true.

 

They are entitled to receive the same employee benefits compared to equivalent employees at the same place of work. They don't achieve employee status, which is a separate legal point. So they still dont have full employment rights, merely enhanced agency worker rights. You could work through an agency for ten years, but still not be able to claim unfair dismissal if you were sacked.

 

Only appplicable after 3 months service.