Business Tips #4: "Sub-Contractors"

Employed or Self-Employed?

  • You're having a busy period, and need an extra pair of hands to cope
  • You don't need a full-time employee
  • No need to pay :
    • Employees NIC
    • Holiday & Sick pay

Not enough to hire someone who "claims" to be Self-Employed.

Length of service does NOT determine status!

Mutually Obliged

The Taxman may present you with a list of reasons as to why a certain worker should be considered as an employee.

These may well be minor and you should challenge his view.

You must prove BOTH parties are NOT "mutually obliged"

Case Law: [Carmichael-v-National Power] (1999)

Reaffirmed [Thomson-v-Fife Council] (2005)

Tip: Make sure contract with contractor has clause:

"The company is not obliged to offer ongoing contracts or work to the contractor, nor, is the contractor obliged to accept such contracts or work if offered."

One-man service Companies

IR35 - Only deal with people working through a Limited Company if you want to take on a fixed-term contract ie: 3 months

Tip 1: Make sure the contract is with the Ltd Company NOT the individual.

Tip 2: Ensure a substitute is named and available should you fall ill etc. A replacement MUST be made available and named.

Tip 3: Use of own equipment and control of own time are also important areas to be aware of.

Safety Tip: If in doubt ask your accountant. We specialise in these areas and have many years of experience in these matters.

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