Can I do some extra freelance work for the company I work for?

[Paddy1000111]

2 minutes ago, Jamie Jones said:

If I understand it correctly the agency pays you on PAYE zero hours now and you can’t work for them as a sole trader anymore.

I am in the position where I need a second person for 8-10 months of the year. 

Previously I could use people very easily as freelance/self employed. Now I can’t. 

I have had to register as a PAYE employer.

This whole situation is to get the state out of paying as much in pensions, getting more employees NI contributions, pushing more small businesses into being VAT registered. Etc.

My accountant is convinced that the VAT threshold will be lowered greatly.

There was talk last year that anyone who was self employed earning £20k or more would have to go VAT registered.

As always they target the small businesses while turning a blind eye to big business.

You are 100% right, if you want to work for another company as a labour only worker and not a true contractor then you have to be part of an umbrella company. It's caused the rise of a load of companies that employ people on umbrella and they skim off the top and make good wedge just doing PAYE administration. 

"Making tax digital" which is a requirement of VAT registered companies was the start to this VAT threshold lowering and stopping the small guys being tax efficient. 

[Jamie Jones]

2 minutes ago, Paddy1000111 said:

You are 100% right, if you want to work for another company as a labour only worker and not a true contractor then you have to be part of an umbrella company. It's caused the rise of a load of companies that employ people on umbrella and they skim off the top and make good wedge just doing PAYE administration. 

"Making tax digital" which is a requirement of VAT registered companies was the start to this VAT threshold lowering and stopping the small guys being tax efficient. 

Thank you and yes this was some of the bits I didn’t cover.

[Jamie Jones]

A lot has changed over the last couple of years and it is continually changing.

You have to remember the government thinks that everyone is ripping them off on tax so they are trying to make it impossible to do that.

that is the whole reason why tax all has to be file digitally.

Any discrepancy or it doesn’t tally with your bank accounts then you get investigated.

And if you think that HMRC are not looking at your bank accounts and trading patterns. Your misguided.

lots changed under anti money laundering laws. HMRC can look at any bank account you might have without you even knowing

Edited December 20, 2020 by Jamie Jones

[Paddy1000111]

6 minutes ago, Jamie Jones said:

A lot has changed over the last couple of years and it is continually changing.

All to destroy the personal service company 👎

[eggsarascal]

24 minutes ago, Jamie Jones said:

Re Insurance: It is not just the insurance company. I understand what you are saying. But it is not as simple as you make it out to be. 

For the work and services you supply as a sub contractor you have to be insured. The main contractor has to be insured for the whole project.

if something goes wrong the main contractors insurance company will look to mitigate their losses. If you think one insurance company will take the whole hit, you will be mistaken.

From a different perspective I did a Welsh Government, Business Wales Introduction to being an employer training day where they covered a whole host of aspects from being an employer, hiring subcontractors, does an non-employed person become an employed person in the eyes of HMRC. Plus various aspects of engaging sub contractors. Even to the point where some sub contractors have to be taxed at source. This happen big time in the construction industry.

It has caused a major hick up in how I move and grow my business.

on the Intro to being an employer day there were about 15 other small businesses who were all having to rethink how they were operating with hired in labour / sub contractors.

You now really do have  to demonstrate that you really are a separate sub contract business. I think that this is to push more people into being LTD and VAT registered.

Being what is described as Freelance / Casual is very much a thing of the past. 

Mad a sole trader you really do have to be able to demonstrate you truly are independent.

This whole issue has caused big problems with companies that uses employment agencies for contracted labour. If I understand it correctly the agency pays you on PAYE zero hours now and you can’t work for them as a sole trader anymore.

I am in the position where I need a second person for 8-10 months of the year. 

Previously I could use people very easily as freelance/self employed. Now I can’t. 

I have had to register as a PAYE employer.

This whole situation is to get the state out of paying as much in pensions, getting more employees NI contributions, pushing more small businesses into being VAT registered. Etc.

My accountant is convinced that the VAT threshold will be lowered greatly.

There was talk last year that anyone who was self employed earning £20k or more would have to go VAT registered.

As always they target the small businesses while turning a blind eye to big business.

 

 

How hard is it to prove you are an independent 

 sole trader if you are?

Edited December 20, 2020 by eggsarascal

[Jamie Jones]

2 hours ago, eggsarascal said:

How hard is it to prove you are an independent 

 sole trader if you are?

As mad as it sounds you can be a sole trader but still have to be put on PAYE if you don’t undertake certain measures.

at first I was in total disbelief as to what I was being told.

to prove you are independent you had to basically do some or all of the following.

Use your own equipment, supply your own PPE, You have to say / have control of when you work and what hours you work, Every job has to be invoiced, you have to work for multiple customers, being VAT register is a big help.

what goes against you is if you use the main contractors equipment, if they supply you any PPE, they have control of any aspect of your hours or when you have to work. If you work for them on block or long contracts, I they pay you expenses that you don’t have to declare. 

If all you self employed work is for one customer..

If 75% or more of your work is for one customer (although I understand that aspect that they might have or will be reducing that threshold).

there are some other aspects that could also be applied by HMRC to dean you as employed.

but they are the main ones.

yep it’s a crazy world now.

As I say when I did that Intro to being and Employer day I was shocked as to how it was working to dean a self employed person that then becomes an employed person in HMRC eyes.

many of the others small businesses were also shocked as well as there was technicalities that meant HMRC could claim tax avoidance/ unpaid taxes off of them.

plus now you could also be fined for failing to pay the pension aspect as well as having to back pay it.

If you don’t believe me then go and do a local government enterprise becoming an employer day. 

They go through lots that you have to know on the new laws.

many companies I am sure will be falling foul of the system and HMRC will be going after the small and medium sized businesses.

The big businesses will get away with loads I am sure like they always have done.

[skyhuck]

I don't believe insurance companies take your tax status as a means of determining liability. HMRC and insurance Co's are very different and see things differently.

 

I also don't believe some of the stories being told in this thread.

[donnk]

On 19/12/2020 at 21:32, Stuck in a Tree said:

I just wondered if anyone knows if this is allowed. My company that I'm on PAYE for offered me extra work as a freelancer instead of as overtime, which seems a bit dodgy and weird to me but the pay's better per hour. I can't find anywhere on the internet where it says this ISN'T ok, so maybe it's fine?

 

Does anyone know more about employment law than me and can help out please?

 

M.

 

how is the company paying you for this extra 'freelance'  work cash  or are you being stopped PAYE and NI as required by the law.

 

Sounds to me they don't want to pay the extra NI.

 

Are you a limited company and submitting invoices ?

 

If so hello IR35. 

Being inside or outside IR35: Knowing where you fit in the legislation | Michael Page

WWW.MICHAELPAGE.CO.UK

---

When you are determining whether or not IR35 applies to you, you will either be found to be ‘inside IR35’ or ‘outside IR35’...

 

 

 

 

[Paddy1000111]

2 hours ago, skyhuck said:

I don't believe insurance companies take your tax status as a means of determining liability. HMRC and insurance Co's are very different and see things differently.

 

I also don't believe some of the stories being told in this thread.

Well lets say your insurance doesn't cover subcontractors working for you. You have a sub in the tree chogging bits down and one of the logs goes through a roof. You claim on your insurance. They don't say "okay, we will ping you over the money now", they want a report of what happened. One of the questions they will ask is who was cutting in the tree, where are their certificates, are they an employee and how long have they worked for you. Your tax status is your employment status, they aren't separate things.

 

The way you can employ people and how it will work is changing massively. You want a freelancer for the day, they are working for you as part of your team using your gear and you are their boss- They are under IR35. IR35 doesn't fit this industry, in fact it doesn't fit a lot of industries. Being a sole trader and working for a couple of different people doesn't mean jack in the eyes of the money grabbers at HMRC.

[skyhuck]

22 minutes ago, Paddy1000111 said:

Well lets say your insurance doesn't cover subcontractors working for you. You have a sub in the tree chogging bits down and one of the logs goes through a roof. You claim on your insurance. They don't say "okay, we will ping you over the money now", they want a report of what happened. One of the questions they will ask is who was cutting in the tree, where are their certificates, are they an employee and how long have they worked for you. Your tax status is your employment status, they aren't separate things.

 

The way you can employ people and how it will work is changing massively. You want a freelancer for the day, they are working for you as part of your team using your gear and you are their boss- They are under IR35. IR35 doesn't fit this industry, in fact it doesn't fit a lot of industries. Being a sole trader and working for a couple of different people doesn't mean jack in the eyes of the money grabbers at HMRC.

If it’s my job, my name on the invoice, me getting the bulk of the money, me deciding when the job is done, etc, etc, it’s ME on the line and hopefully insurance will cover my arse. Could I breach the terms of my insurance, by using untrained staff? Of cause I could, but that does not magically make it the financial responsibility of any person “working under my instructions” unless I have subbed out the job completely and they then call the shots and carry the can.

 

 This was all done to death more than 15 years ago. When HMRC clamped down on labour only subcontractors. At the time I was a subby climber, I worked for various firms, including Fountain forestry. I got a letter from the tax office saying they where happy I was genuinely self employed. But Fountains where scared of their tax liability and where making no exception. I bough a chipper, got a groundie and subbed into them as a small gang.