Nanny offering to work for no tax

LM - I was just thinking that some people might think self-employed nanny = no tax, and therefore massive savings, which, ultimately it doesn't - as you confirm

OCR Voluntary which replaces the Childcare Approval Scheme, which in its turn had replaced the Home Childcarer Scheme (are you getting confused yet?), to my knowledge is no different to employing a nanny.

onthefence - is this the scheme you mean? It registers a nanny or childminder to care for a child in the child's own home, but to my knowledge it does not change the tax situation regarding employment status. A childminder caring for just one family, in that families home, on a regular basis, would in my view at least probably be unlikely to be self-employed.

Haven't heard about new rules for childminders, and can't see anything on the NCMA site - do you have any more information or a link? How does it work (as cms usually look after more than one child at a time?)

Hatwoman - I don't think that I did particularly save any money in terms of a gross hourly rate, though I didn't have to worry about Employers NIC, nor the need for payslips, and making payment to the Revenue. The arrangement I described was set up because both the parents and the nannies wanted flexible arrangements. It was only when we came to look at the question as to whether we were employers that we realised that we weren't. The arrangement did give me consistent in-home care for my children from people I had selected and trusted, and to any outsider who wasn't keeping track of which days my nanny appeared I guess it would have looked like a standard employee/employer arrangement. But it does show that a nanny can be legally self-employed. FWIW the nannies were older and fairly experienced, but also financially stable so that they were happy to have the risk of no work on a particular day, and also wanted to be able to decline work if a better opportunity came along. Younger nannies aren't always in that position.

so....
what is the point of the new childminder thingy that registers the childminder to work in the child's own home?
isn't that a sort of self-employed nanny?

don;t forget that whilst they may be circumstances in which you can use a self-employed nanny it's unlikely to save you much in the way of money - whether they're self employed or employed by you they're going to want approximately the same net earning. it's not that relevant whether you pay the tax direct to IR or you pay the nanny enouugh so that she can

Sadly then it seems that for most of us who need the same nanny to turn up at the same time each day and work the same(ish) number of hours each week, the employee route is still the only way to go!

Fron the pint of view of someone who works in the office of a contracot in the consturction industry, the IR are really clamping down on who can be classed as self employed in this field too.

When we subcontract out to a builer we provide a quote for the job. This is the price we are paid and as a subcontractor we bear the penalty for any financial loss if the work takes longer than expected etc. All expenses are factored into our quote.

We are free to send any qualified tradesman to site and to to the work during whatever hours we wish within the operating hours of the site. So if we want to knock off at 2.00pm one day we can as long as the work is done.

Subcontractors who are told where to go, what hours to do and who are paid hourly with no risk of financial loss if the job goes wrong are now classed as employees.

Good points - nannynick/ladymuck

Its also worth considerig jenni that this is also a particular area that HMRC are focussing on at the moment so it could be tricky to try and argue something that is at best hopeful at a time when HMRC are really going in heavy on self employed status .

The Narich Pty Case is not a UK one though, and therefore does not constitute law in the UK. The reason that it is quoted in the ESM is that these or very similar facts have not ever been presented to a UK court and therefore there is no case precedent here (other than Express and Echo, which effectively cites the opposite), but sometimes countries which have tax law derived from the UK law (so includes Ireland, Aus, NZ) will have had cases presented which may give some indication as to how a similar case might be decided in the UK in the event it was appealed.

With regard to care in the home (nannies), most factors which can be considered for determining employment status seem to be of little relevance. While in themselves they give a pointer in one way or other, they are only little pointers.

The big pointers seem to be the following:
Could the engager [parent] exercise control over what the worker [nanny] does?
Could the engager [parent] exercise control over when the work is done?

As a nanny I feel that I can choose for myself what I do, and in practice I do choose what I do, but it remains the fact that my employer could tell me what to do.
Also, my start time is set by my employer. They are indeed telling me when the work is to be done.

If as a parent you do not have any control over what the nanny does, or when they do it, then the nanny may (if other factors conclude a similar result) be self-employed. However, in reality I doubt there are many situations in which a parent would not be able to dictate what the nanny does, or when they the nanny does it.

Clearly I am not a lawyer, so the above is purely based on how I am interpreting the ESM.

Getting on with my ESM reading, and I now feel that part of what I wrote earlier is wrong.
---
My reasons for this are:

• nanny who wouldn't (and didn't) agree with every request made in terms of hours,
• who could send a (pre-approved, qualified and known to the children) alternate.
• nannies worked for a number of families
• parents may not get the nanny they want on the day they want
• the nanny may not have work on every day ---

The part about sending an alternate worker, is invalid, as the parent could pre-approve that person. See ESM1052 where it talks about Narich Pty Ltd v Commissioner of Pay-Roll Tax.

Anyone else agree with that (especially those of you who deal with this sort of thing a lot). Have I interpreted this correctly?

I employ people for an hour after school each day to work as ABA therapists with my eldest son ( and occasional Saturdays). I also employ mother's help type people during school holiday. Most of these are employees, but one works for several families and is therefore self employed. She does set her own hours (tells me when she is available, I choose from those days). The money comes from social services, and I explained to her that they might want to see proof that she was declaring tax, so far so good.

I would imagine a nanny providing ad hoc childcare, or working with several families could quite easily declare themselves to be self employed.

I liked this little snippet from ESM
Source
"It must be emphasised that status in not a matter to be determined by running down some form of check list or adding up the number of factors pointing toward employment and comparing that result with the number pointing toward self employment. It is a matter of evaluating the overall picture that emerges from a detailed review of all the facts."

In the past, the right of control has been seen as a good indicator of status, but these days that is no longer the case. Therefore just because a parent has control of what their nanny does, it does not automatically mean that the nanny is an employee.

Oh what a fun and confusing subject.

I am of the view that in Ladymuck's specific case, that it appears that the nannies involved were under a contract for services (self-employment), not contract of service (employee).

My reasons for this are:

• nanny who wouldn't (and didn't) agree with every request made in terms of hours,
• who could send a (pre-approved, qualified and known to the children) alternate.
• nannies worked for a number of families
• parents may not get the nanny they want on the day they want
• the nanny may not have work on every day

Clearly the individual contracts would need to be considered, but from information supplied the relationship is not typical of a Parent / Nanny relationship, where the parent is Master and the Nanny is servant.

Just my view of course... off to study the ESM.

Very true, ESM is an interpretation of the law by HMRC. It is not the law itself and thus can be challenged in a court.

If we are being strict the ESM guide is helpful because it is the HMRC's internal guidance to its staff on how to conduct cases. It isn't actually the law, but the HMRC's interpretation of the law (much of which consists of case precedent).

Should it be helpful to anyone, you can find some parts (possibly all) of the Employment Status Manual at: HMRC: ESM Manual

That I feel is used by Status Officers to determine employment status for each individual job.

I agree with Ladymuck that links to sites providing payroll services are not good sources of information... while being a good guide, they are not an official source... personally I am only interested in official information from government websites, in particular HMRC.gov.uk

Thinking about it, I can not locate any information from government which states that a maternity nurse is self employed. Again, to me they don't meet the criteria. Yet most agencies seem to feel that a maternity nurse is not an employee.

And again, with greatest respect, I beg to differ. The first two sites that you link two are trying to sell payroll services (so of course they're not going to help you set up a self-employed structure!).

The HMRC site does give some indication of the various items considered when looking at employment v self-employment. I would totally agree if you had said that having a nanny working for your family solely for a 60 hour week in your home under your terms can be nothing other than a contract of employment.

However there are many other ways of structuring a contract for nanny services, especially if you are only looking for part-time and flexible cover. These won't suit everyone, and probably wouldn't suit the OP, but they can exist such that a nanny is not an employee and it is not illegal.

Yes, I am one mother who was happy to have a nanny who wouldn't (and didn't) agree with every request that I made in terms of hours, and who could send a (pre-approved, qualified and known to the children) alternate. And this arrangement worked very well for us for 2 years and was discussed with the tax office. The nannies (who worked together effectively) worked for a number of families (most of whom are friends of ours). There are of course increased risks to both sides - the parents may not get the nanny they want on the day they want, and likewise the nanny may not have work on every day. But of course this is one of the risks of self-employment! But given that most of the parents involved were self-employed and could themselves be flexible this arrangement worked very well. In fact it continues today though I don't tend to be part of the arrangement.

So once again, whilst the majority of nannies are employees, it is legal for a nanny to be self-employed. It is just rare that the circumstances allow her to be. And I would point out that the above arrangement came about as a significant number of us needed a nanny (and preferably the same one, or possibly one of two) for irregular numbers of days. We weren't trying to avoid tax or NI, and I'm not sure that this arrangement was particularly cheaper on an hourly basis say.

I don't think the Revenue are likely to say a nanny can never, ever be self employed, just as they wouldn't say any other occupation could never be self-employed. Because you always have to allow for individual circumstances. However, it's very unlikely a nanny would qualify for self-employed status due to some of the issues mentioned about sub-contracting and setting own hours (and using own equipment at own business premises, etc. etc.).

Ladymuck I am wondering under what circumstances HMRC agreed that your nanny (at that time) could be self-employed. Also, did HRMC agree that verbally, or in writing?

I am of mixed opinion on this, as other than a letter to a nanny agency I have not seen evidence from HMRC stating categorically that a nanny can not be self employed, or indeed that a nanny must be an employee. As far as I can see HMRC would access each case on it's own merits - and if a nanny did manage to meet the criteria for being self employed, then it would be possible.

However, the vast majority of childcare providers working in the child's own home, would not meet the criteria. But that does not mean than on a rare occasion someone would meet it.

Ladymuck, if you seriously have a self-employed nanny and it is approved by IR, can you please post exactly how this works as there are lots of us who would be interested in knowing!

Sorry but you do have to employ a nanny.

It is a legal requirement in the uk...

there are LOADS of links
If you employ a nanny in the UK and you pay her more than £100 per week (tax year 2007/2008) you have the same legal responsibilities as a commercial employer

Aren't nannies self-employed? No, nannies don't meet the Inland Revenue criteria for self-employment status. The childcarers that do are maternity nurses and childminders who are responsible for their own tax and NI contributions.

governemnet site which shows criteria that you have to fulfill to be self employed.... which nannies DONT fulfill!
clearly if you have a nanny which comes when she likes, if it suits HER, not you, then maybe she might be employed... ut i cant imagine many parenst appreciaiting being dictated to BY their nanny about when (S)HE comes to work!

Sorry NannyL, but that is too general a statement. I haven't seen any statement of law that reflects that (in fact it is hard enough to find where the role of a nanny is even defined in UK law).

It is far more difficult for a normal nanny contract to be a contract for services rather than a contract for employment, and therefore at least 99% of contract will be for employment. But it is possible to have a self-employed nanny - I have had one, and HMRC agrees!

julie woolie as of april 2 years ago it is illegal for a nanny to be self employed...

about the only exception (and there are debates even here) is with maternity nurses who only stay in a job for a matter of weeks.