Are your staff truly self-employed?
There is no rigid definition in UK law over what exactly makes someone employed or self-employed. The advice on government guidelines is that each situation will be assessed on the merit of each individual
arrangement.
There are however a number of precedents that exist to help you determine what their employment status is. For example, if they work for you and use their own tools they would probably be classed as self-employed.
If they receive certain benefits from the company, such as a pension or a company car, they would likely be considered an employee.
The providing of a uniform would in most cases not preclude for maintaining a self employed status.
Self employed staff must be able to freely choose who they work for, when and for how long. They must be able to utilise this choice without any negative restrictions regarding future work.
Record keeping by your self-employed staff
They will need to keep accurate financial records for their business in order to satisfy HMRC requirements. These will vary depending on the line of work, but any business or sole trader must keep records of all
sales,
purchases, expenses and earnings.
The more detailed the records are, the more likely they are to satisfy HMRC they are complying with the law.
Taxes for the self-employed
They will need to pay income tax and National Insurance on any profits made. To do this, they will need to register for a self-assessment with HMRC. They should ideally use an accountant or complete their own Self
Assessment.
Insurance
They may need some sort of insurance and here are a few common examples.
Car or vehicle insurance
Any vehicle used in relation to the self employed work must have adequate cover for that use.
Public Liability Insurance
This protects them if a member of the public comes to harm or sustains property damage due to their actions.
Goods-in-Transit Insurance (essential if they are using their own tools and/or vehicle)
This will cover them if any damage or loss occurs to a third party goods whilst under their control. If the work is contracted to you then initial claims will your responsibility and your insurer may then look to
their
insurer for reimbursement.
To Recap The Basic Requirements For Being Classed As Self Employed.
- Be In business for themselves and responsible for the success or failure of their business and the ability to make a loss or a profit;
- Able to decide what work they do and when, where or how to do it;
- Able to hire someone else to do the work; ( not usually applicable to the removals industry)
- Be responsible for fixing any unsatisfactory work in their own time;
- Agree a fixed price for work – it doesn’t depend on how long the job takes to finish;
- Use their own money to buy business assets, cover running costs, and provide tools and equipment for the work;
- Not be restricted for working just one client.
- Arrange their own adequate insurance.
If the arrangement doesn’t satisfy these rules, then they may need to be classed as employed by the Company they are working for.
It is your responsibility as a business owner to ensure that your staff are contracted by you and on your PAYE System or else they are self employed. If they are self employed then you have to check regularly that
they
are complying with the self employed rules.
If you do not undertake due diligence to ensure that anyone that works for you and claims to be self employed is acting within the rules of HMRC for self employed compliance then you could face stringent penalties
and
almost certainly extremely large financial implications.
For your own peace of mind you should check their insurances are up to date and adequate so that any issues that they cause can be reclaimed by your own insurers.
