This Government believes that the tax system should continue to recognise the additional risk someone who is self-employed takes on and strongly supports enterprise and those who choose to work for themselves.
Despite this however, there is increasing evidence that some companies and Employment Businesses/intermediaries are disguising the employment status of their workers deeming them to be self-employed in an attempt to avoid paying Employer National Insurance which in turn would reduce the costs associated with the workers employment rights.
As a result of this, recent legislative changes are highlighted in the new test for Self Employment according to the HMRC’s latest guidelines as they now ask;
“Is the worker supplied to the client by the employment intermediary under the direction, supervision and control of the client they are undertaking work for?”
If the worker answers yes to this question then they would not be self-employed.
No matter how much the worker claims to be self-employed; they pay their own tax and national insurance, have an accountant and a UTR number or even claim to be a limited company, if they are under the direction, control and supervision of the client then they cannot be self-employed.
So a plumber who is called out to mend a leaking pipe, turns up to their client when he wants, uses his own tools, goes to the wholesalers to buy his equipment and invoices the client for the time he has worked. This passes the self-employment test.
However a worker who is told when to start and finish, what to do, uses the client’s equipment and is under the clients direction, supervision and control would therefore not be self-employed.
The best way a client can protect their business and satisfy HMRC, is to put the worker on their own payroll or the payroll of the Employment Business/intermediary who has supplied the staff. It would be the only way the client can be sure the correct PAYE deductions have been made.
The Government has time and time again demonstrated its commitment to tackling areas of the tax system where avoidance behaviour is widespread and keep things fair for compliant businesses.
These actions from the HMRC is just the next step towards creating such a level playing field for all businesses and workers, stopping unfair arrangements so the correct deductions of tax and PAYE are deducted at source.
We want your views on these recent attempts to tackle false self emplyment, is this enough or can more be done to eliminate this? Have your say;