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Do you see any problem with this

(5 Posts)
Diamondsandpurls Wed 27-Jul-16 07:12:48

I have a small background in working for a company who knows about things like this but it was a long time ago and I'm wondering if I have the right end of the stick.

A family relation has a small company who takes on people to do work at various locations. The people who do this work are all 'self employed', they all have to complete their own tax return and do not receive holiday or sick pay. So effectively the family member is acting as an 'agency' by finding the people and the work and putting them together.

My understanding is that this falls under the 'gang master' type rules (can't remember any more about it than this though).

Another rule i remember clearly (due to a company falling foul of it and having to close) is that if you pay a self employed person (rather than a limited company), and they don't pay their tax and Ni then you are liable for the tax and Ni.

However would the fact that these people are low earners and unlikely to go over the 10K taxable earnings limit make this less of a concern?

Just wondering if anyone knows anything about this and can help? I'd appreciate it if you could let me know if I'm totally wrong?!

Hoppinggreen Wed 27-Jul-16 09:21:19

Look at the HMRC website. There is a list of criteria For being employed/self employed, it's not a choice an employee or employer can make

Diamondsandpurls Wed 27-Jul-16 11:01:32

Thankyou, I do have a bit of experience in IR35 so I think they would be able to be classed as self employed (scraping by) due to those rules.

It's more the company paying them directly as self employed and being liable for the tax and Ni should the self employed person not fill in a tax return that I'm more interested in.

In my experience, most people wanted to pay their contractors through a limited company in order to avoid liability for tax etc.

They are essentially working as an agency, taking a cut of the pay but are not paying holiday/sick pay or taking any responsibility for the workers' financial affairs.

OllyBJolly Wed 27-Jul-16 23:43:08

Agencies don't "take a cut of the pay" - they charge a bill rate and pay the employees from that bill rate.

You can't be sued for unpaid tax if there is no tax payable i.e. the earnings are under the threshold.

If the relation has a bona fide company, and is putting revenue and costs through the company accounts, then the HMRC should pick up on any wrongdoing (would be difficult to pay number of people without that being evident on accounts).

What is your concern?

Balletgirlmum Wed 27-Jul-16 23:50:08

There have been dome changes recently with regards to agencies & most agency workers are classed as employees. If they earn under the tax & NI level that isnt a problem but the workers should be entitled to sick & holIday pay & would likely win at tribunal if they pursued this.

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