Driving Instructor Query

T.C.

I have a driving instructor client. He is now "contracting" some work to another instructor. My client is getting the work, providing the other instructor with a car and then just taking a percentage of his earnings. Obviously my client has the expense of providing the car etc, but are there are other rules I have missed concerning the "commission" side of this. Views appreciated.

PGM

How does this work from insurance point of view?

I'd make sure your client makes sure their subcontractor has the relevant cover.

Can't think of much else from a commision point of view...

T.C.

So from the tax side of things, ok to enter income to my client as, say £50, for the week. I don't need to enter £500 as income, less payment made to subbie driver of £450, leaving £50 profit.
Just not sure what the income is - £50 (the commission paid to my client) or
the £500 total received less expenses paid to subbie driver

Help please!

Oh, and is the subcontract driver strictly self-employed anyway????

deanshepherd

Sounds like the latter to me and potentially a VAT registration problem for a business that already has very tight margins..

PGM

T.C. wrote: »

So from the tax side of things, ok to enter income to my client as, say £50, for the week. I don't need to enter £500 as income, less payment made to subbie driver of £450, leaving £50 profit.
Just not sure what the income is - £50 (the commission paid to my client) or
the £500 total received less expenses paid to subbie driver

Help please!

Oh, and is the subcontract driver strictly self-employed anyway????

who is the learner driver a customer of? Thats the question, is it the sub contractor or your client?

Hopefully this should be fairly clear to them and that'll be your answer.

With insurance, its always worth a question to your insurers. We're currently being sued for work done by a subcontractor! Because we were contracted by the owner of the land to do the work. So then we have to counter sue the sub contracter and hope to hell they are the relevant cover. But hopefully this won't apply to your client.

T.C.

Oh thanks. I will get back to my client.

T.C.

I think I have opened a can of worms now on employment status - http://www.hmrc.gov.uk/manuals/vtaxpermanual/VTAXPER66300.htm

Oh no, more problems!

Monsoon

I missed this thread for some reason - my first thought is are they truly self employed? It will come back to bite your client not the 'employee' if they are actually deemed to be an employee. Given this seems to be a specific area for HMRC then I would just go with the guidance and if your client has to employ, then that's what needs to happen.

If they are self employed, then if the student pays your client (the School) then all of the revenue is their turnover and the pay to the instructor is a direct expense. This turnover would count towards the VAT threshold.

I think this one needs looking at very carefully!

T.C.

Yes, I think so too, but glad you agree. I will dig deeper!