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Original poster

DP just been told that job he just got is payment by invoice only?

21 replies

ethelb · 07/01/2013 12:56

DP has just started his new job after losing his last job in October. Great.
He was told it was a 7 month contract but has been told today that work is by invoice. It is a big media/news organisation (we are both journos) and i am surprised they are able to do this.
His work hours are 9.30-5.30 monday to friday until the end of July. So pretty formal.
Does this mean he has to register as self employed? What does it mean for his benefits? (he told the job centre he was starting a full time job last week but now this has transpired to be incorrect surely?) what does this mean re taxes and student loan?

OP posts:

GlobalDisaster · 07/01/2013 13:04

He's self employed alright. He'll need to inform the tax office and if you have children,you'll probababy be able to recieve tax credit. If I was you ,I'd go along to the local tax office and find out where you stand. Your hubby will also have to pay his own stamp or national insurance as a self employed person.This is usually taken every month via direct debit.

MrsMargoLeadbetter · 07/01/2013 14:14

It sounds like it is a self-employed contract, but that is really rubbish if they were clear about that.

Has he queried it with them? I do think that journalism is one of those industries where employers are leaning more towards self-employed moreso.

There are laws en.wikipedia.org/wiki/IR35 to prevent companies from using self-employed people instead of staff, but big orgs can get around it and the current Gov is potentially looking to get rid/change it etc.

Has he looked at the fine detail of the contract, it is unlikely he'll get sick pay/holiday day so that needs to be factored in when budgeting.

Is he a member of the NJU? They might be able to help/other journos might be able to say if the deal he has been given is the norm/fair.

If it is self-employed as Global says he needs to register as so, paying NI contributions, saving monies towards tax and NI etc and do an annual return this time next year. This is the official link www.hmrc.gov.uk/selfemployed/register-selfemp.htm

Sorry that the positive of a new role has been dampened.

MrsMargoLeadbetter · 07/01/2013 14:16

rubbish if they weren't clear about that, sorry.

MrAnchovy · 07/01/2013 14:39

Did they say company invoice only? If so he will either need to form and run a company (there are lots of firms that specialise in organising this for people in his situation) or join an "umbrella company" which costs more and is less tax efficient but easier to set up.

It's quite unusual for companies to engage people who work standard hours on self-employed contracts (as opposed to through a company), but if this is the case yes he will need to register as self employed, he needs to inform the benefits office of the change as he will be working and earning regardless. He will need to sort his own taxes, either through the company or as self employed via a Self Assessment tax return, which will also deal with student loan repayments which are due on total income, not just income from employment.

Kiriwawa · 07/01/2013 14:45

That sounds v dodgy to me from their perspective - if he's got fixed hours etc, they are making themselves potentially liable to be seen as trying to get around paying NI contributions etc as an employer.

Original poster

ethelb · 07/01/2013 15:29

@kiriwawa that's why I am so shocked. Esp as they have only informed him of this when they turned up. He had discussed a fixed term contract with them over the past two weeks.

I also have worked for a big media organisaiton and yes, traditionally lots of people are paid as freelancers, often legitimatly. However, three years ago a review of everyones contracts was issued by our accountants to make sure that it was legit, and as a result lots of 'freelancers' were put on payroll as doing otherwise would have been illegal.

He will just have to call up the tax office to register immediatley and maybe get on the phone to the NUJ as well (he is a member). Is there actually anything else he can do without jepordising the job he has got?

OP posts:

PlaySchool · 07/01/2013 15:37

HMRC are very much against this sort of arrangement as it is a way for the company to avoid taxes. I'd get some independent advice from an accountant if I were him.

WilsonFrickett · 07/01/2013 17:14

He's not a freelancer if that's his contract, hours, etc - he'd need to set up as a contracter which is I think more onerous. 'Tis more than a bit cheeky of the employers! I second (or third) the call to the NUJ.

WilsonFrickett · 07/01/2013 17:15

Also if he's assumed it's a contract-contract he's maybe not charging enough. As a pp said, he's unlikely to get sick pay, etc.

Original poster

ethelb · 07/01/2013 17:26

@wilson that's what I was thinking. It is standard pay for a temp contract in our line of work. Freelance would be about 20% more per week.

I would love to have some spare shrapnel banging around for an accountant but DP has been unemployed for 3 months so that's unlikely. That's why I feel this is so unfair.

Coud you give me some advice as to how he would set up as a contractor and what that would mean tax wise?

OP posts:

WilsonFrickett · 07/01/2013 17:42

ooh, that's cheeky! Poor DP. Definitely speak to the union, although I appreciate if he's been looking for something for a while it's hard to rock the boat. I'm freelance so don't know about contracting I'm afraid. Certainly I don't think you have to do anything immediately, just make sure he saves up his tax, etc, then see an accountant when there's a bit of cash spare?

Original poster

ethelb · 07/01/2013 18:46

Thanks for all your help, esp regarding contracting as that hadn't occured to me (I have freelanced and have just strated up as a sole trader and may start up a ltd co so I know a little teeny weeny bit about those).

I suppose what I am most scared of is him falling foul od IR35 legislation. Though apparently I am not the only one: www.freelanceuk.com/news/4192.shtml

This kind of misuse is 'on the up' apparently.

OP posts:

MrAnchovy · 07/01/2013 19:40

I suppose what I am most scared of is him falling foul od IR35 legislation.

If he stays self employed he has nothing to fear from IR35, it only applies to contractors who use a limited company.

If HMRC decide that work under the contract is employment, they will ONLY chase the employer in these circumstances.

Journalism is a profession with a lot of freelancers so most companies know the score so if they are offering a PAYE rate on a SE contract it sounds like whoever is hiring is not talking to their HR/procurement people: when they do, don't be surprised if it gets messy.

MrAnchovy · 07/01/2013 19:42

"I don't think you have to do anything immediately,"

You have to inform HMRC that you are self employed, and start paying Class 2 NI contributions immediately.

MrAnchovy · 07/01/2013 19:51

"I don't think you have to do anything immediately, just make sure he saves up his tax, etc, then see an accountant when there's a bit of cash spare?"

That's really not a good idea. No reputable accountant will charge you for an initial discussion - and for someone self employed many will not expect payment until they have some work to do, which is not going to be until April (tax return) at the earliest. Do check first though.

If he is going to be self employed there are lots of things he needs to know before he starts work - keeping receipts for travel tickets for example (a pain if you work in London because you need to register your Oyster card in advance).

GlobalDisaster · 07/01/2013 20:53

I concur, it does sound dodgy. If they ask for contracted hours they must/should have contracted pay. Get busy looking for a proper job. Sometimes/often,companies are lax when it comes to paying on time.

Shattereddreams · 07/01/2013 21:14

Keep receipts for everything. He can offset a lot of expenses against his self assessment form.

I work in similar environment and sign off time sheets. It sounds rather dodge to me, our company will not pay anyone on the terms your DH has been put. Everything has to go via payroll PAYE.

Shattereddreams · 07/01/2013 21:16

Good point global. He must ask immediately what the terms if payment are and find a good contact in the accounts payable dept. I betcha he experiences lots of 'lost' invoices.

Who is responsible for authorising his invoices, he should know who this is and actually stand over them to sign his for payment. It's poss an automated system which also would imply late payment.

Ruddy media.

WilsonFrickett · 07/01/2013 23:24

Sorry Mr A, I meant he didn't need to panic today about not having an accountant, not that he didn't need to do anything at all. Badly expressed

Original poster

ethelb · 08/01/2013 09:28

Don't worry, we will be speakign to HMRC and union today. If things aren't then clear we will be speaking to an accountant.

I am also concerned about lost invoices, but there isn't a whole lot we can do abotu that, other than not be freelance, which doesn't appear to be an option at the mo.

OP posts:

littleducks · 08/01/2013 10:32

Dh had this recently (working for a government departments so presumerably not a taxavoidance issue)

He had to have a company invoice so initially went through an umbrella company (for speed) and then set up his own company and has an accountant etc. Its a bit odd because although he works for his own company he is not classed as self employed but an employee of said company.

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