How do you employers stay on the right side of the tax man?

[Hodge]

Following on from another thread about self employed/employed I thought it would be good to get some info/advice as to how you use labour only contractors in regards to invoicing and tax? How do you know the person you are using pays tax or is even registered as self employed? I have been told that the tax man can come after the employer for unpaid tax. This would be bad news, if joe blogs who does days here and there for you and is paid on a day rate doesn't pay his tax. How do you guys cover yourselves? Thanks, Hodge:)

[daveindales]

I'm not sure how the tax man can come after an employer for a genuine labour only contractors not paying his tax. If it's like you say and the odd day here and there, then it's surely the contractors responsibility to pay his tax, not yours. For example, if I was a private home owner and got a plumber in to fix a leak. I pay his invoice and it's up to him to sort his tax affairs out not me.

 

Am no expert though. |I would ask my accountant.

[High Scale]

As long as you have an invoice to cover the fact that you have paid the genuine labour only contractor then the rest is up to him/her, he/her is not an employee so their tax affairs are their business.

[monkeybusiness]

Phone HMRC and ask the question - they have a questionnaire that they go through on the phone and will tell you if you are operating legally or not with sub-contract labour. For a fee they will send you a transcript of the conversation which you can use as evidence of not needing to employ your staff (if that is the case!). The onus is subsequently on your subbies to pay their own taxes/NI.

[Hodge]

This is what I was all ways lead to believe too. I get an invoice for work done of my contractors and I pay it. I do have their UTR numbers though. Thanks for you replies and I will enquire with my accountant:)

[Shane]

Its the UTR number that matters (according to my accountant).

If they work for other people as well, as long as you ave their UTR and tell them that the tax is their responsibility you should be OK. Just be ready to cooperate with InRev if they contact you and have the UTRs at hand.

My guys pay their tax themselves and they know my accounts show exactly what each has been paid.

If in doubt - check with an accountant.

As he once said to me 'Asking IR for advice on tax issues is like asking a burglar to look after your house while you are on holiday' Harsh but you can see what he means

[Stephen Blair]

Get their UTR number, simples!!

[Burytreeman]

I have had limited experiance in this but this is what happens when I work for someone;-

1. I provide the person engaging my labour with my UTR Number.

2. He/She then "Verifies" this with HMRC who also tell him the percentage to deduct from my invoice. ( 20% in my case)

3. When i submit my invoice he makes the appropriate deduction, and issues me with a voucher stating earnings and deductions made. This covers me that the tax in relation to my invoice has been paid. I forward this to my accountant as part of my records.

 

does anyone else identify with this system?

[Hodge]

I have had limited experiance in this but this is what happens when I work for someone;-

1. I provide the person engaging my labour with my UTR Number.

2. He/She then "Verifies" this with HMRC who also tell him the percentage to deduct from my invoice. ( 20% in my case)

3. When i submit my invoice he makes the appropriate deduction, and issues me with a voucher stating earnings and deductions made. This covers me that the tax in relation to my invoice has been paid. I forward this to my accountant as part of my records.

 

does anyone else identify with this system?

 

Is this CIS? I have not heard of that before? Thanks for your input mate:)

[nick channer]

Following on from another thread about self employed/employed I thought it would be good to get some info/advice as to how you use labour only contractors in regards to invoicing and tax? How do you know the person you are using pays tax or is even registered as self employed? I have been told that the tax man can come after the employer for unpaid tax. This would be bad news, if joe blogs who does days here and there for you and is paid on a day rate doesn't pay his tax. How do you guys cover yourselves? Thanks, Hodge:)

 

I pay no wages at all. All guys who work for me bill a client for a job or 2 every week. I explain to client the situation and they get bill from one my guys for the tree work or logs they then give them a cheque. Simple.