Employment status

Emthi

He is a delivery man works for news agency. As a contractor he is paid weekly through invoice. He has registered as a self-employed and pays class 2 NI contri.

For the tax return purpose do we need to treat him as a self employee as we do normally? or are there any other considerations as a contractor?

Helps appreciated

groundy

This is a normal self employed tax return from the facts you have given. There doesnt appear to be anything special to worry about.

Emthi

IR35 Implication

Thanks groundy

Are there any IR35 implications apply ? whether he needs to pay PAYE and NI class 1 and so on?

Monsoon

IR35 would only be a consideration if he was trading through a Ltd Co. As you've said he's self employed and paying Class 2s, then IR35 is not relevant.

It's still important to check his relationship with his client to decide whether it's one of employment of self employment. If the former, its the 'employer' who will be chased by HMRC for taxes not the 'employee' (if he was trading through a company and IR35 was applicable it would be the subcontractor Ltd Co that would be liabile and not the 'employer' company).

Usual things. If the chap runs a delivery company and the news agency is just one of many clients then no problem. If the chap has a bit more of an ambiguous relationship (i.e. he could sort of look like an employee) then the usual things apply - right of substitution, financial risk, right of control etc.

Emthi

Thanks faerie9

He has registered for S/E and is paying class2... every thing s fine. But still seems that is a grey area. It is very narrow point to distinguish.

Let me brief the story- the chap has only one client who is a news agency. He delivers the NEWS every day from 3am to 7am and gets payment through the news invoices.

He has bought a delivery van for this, fills fuel, MOT, Road tax, Insurance, Repairs, every thing is from his pocket.

Normally we have to put him in the S/E side, but when you perform the TEST, it gives confusion

groundy

There is case law that would support his claim as self employed (cant remeber the name of the case sorry) as long as he is able to supply a substitute as well as meeting other requirements.

I would not worry to much about this as mentioned previously the onus is on the employer/contractor to get this right. If HMRC were to decide your client should be an employee there is no come back on your client.

As mentioned previously for you this should just be a normal sole trader accounts and tax return, I think you are maybe over complicating your position.

Emthi

of course it is groundy

still arguments going on in accountingweb. I feel it s not fair on the person caught in IR35.

Monsoon

IR35 isn't very fair. But this time it's not your concern.

It's the News Agency who will get stung, not your client, if HMRC find in favour of Employed status.
In the interests of future work and relations, though, it might be a good idea to get a good contract in place and get it reviewed by a specialist (if you need one, please PM me as my firm does this). If HMRC sting the 'employer' in the future, even though this won't affect your subbie per se, it will of course cause problems with his working arrangement - it's always better to get good contracts in place at the beginning.

Link for AWeb thread for those interested,