Sub-contracting work from ltd.co. to sole-traders

[SaTTaN]

I normally operate my Ltd. co providing IT architecture consultancy.

I have an SMB who are asking me to help them out with a few IT things, I don't really have time to do it but I have a couple of good friends who have taken career breaks to study at university full-time (very mature students!).

it's not a lot of work - maybe 4-500/month for each of them for the next 6 months or so - which I guess isn't worth them registering as a ltd. co?

if they register as sole-traders and I contract for the work but use them to supply the labour, invoice for their time and take a small mark-up + add some of my time. am I asking for a world of pain with regard to HMRC etc. as I would sort of be making myself an agency?

BTW customer is ok with me subbing this out he's just looking for one person to sort it out but doesn't really want to contract them directly.

this is short-term help with a project, rather than a long-term engagement (but who knows )

[Old Greg]

I normally operate my Ltd. co providing IT architecture consultancy.

I have an SMB who are asking me to help them out with a few IT things, I don't really have time to do it but I have a couple of good friends who have taken career breaks to study at university full-time (very mature students!).

it's not a lot of work - maybe 4-500/month for each of them for the next 6 months or so - which I guess isn't worth them registering as a ltd. co?

if they register as sole-traders and I contract for the work but use them to supply the labour, invoice for their time and take a small mark-up + add some of my time. am I asking for a world of pain with regard to HMRC etc. as I would sort of be making myself an agency?

BTW customer is ok with me subbing this out he's just looking for one person to sort it out but doesn't really want to contract them directly.

this is short-term help with a project, rather than a long-term engagement (but who knows )

Not sure about sole trader. Can't they use an umbrella?

[craig1]

Do you run PAYE? If so, consider sticking them through that as casual workers. Make sure your mark-up to the client includes employers NI though!

It may not be a big risk and has limited amounts of money at stake but you open yourself up to liabilities these days subbing out work to self-employed people.

[TheFaQQer]

You can do it, but if they are negligent, make sure your liability insurance covers them. Also, if they don't pay the right tax, then your company becomes liable (which is why agents won't deal with a sole trader).

If you can pay them through PAYE, then that would be the most straight forward for you (as craig1 says) and make sure your markup makes it worth your while.

Also, if you are on FRS, then there is an upper threshold where you need to deregister - doesn't sound like you'd be close to that, but I can't remember what it is. If you have to deregister from FRS, then you can't register again for another year.

[MarillionFan]

I would suggest you just do PAYE for them.

[Old Greg]

On refelction, brolly with cost you if you're on FRS, so PAYE it is.

[Wanderer]

There is a lot more to employing someone than "putting it through paye" and self employed people can do a bunk leaving you to pay their tax bill.

I'd say put them through an umbrella using one of the PCG's contract templates and then you can wash your hands of it.

[TestMangler]

I see normal CUK service has been resumed.

The closest thing to a solution in this thread is MF's suggestion which you can do, but you can easily do what you originally suggested.

Rather than take advice from people who clearly have never done what you're trying to do, PM me and I'll fill you in

[TestMangler]

There is a lot more to employing someone than "putting it through paye" and self employed people can do a bunk leaving you to pay their tax bill.

I'd say put them through an umbrella using one of the PCG's contract templates and then you can wash your hands of it.

Right, so lets imagine the scenario where you clean windows as a sole trader and you clean the windows of two shops who operate as limited companies. Are you seriously suggesting that these shops become liable for your unpaid tax in the event of you drinking your income and not paying tax ?

I would suggest you stop giving advice

[TheFaQQer]

Right, so lets imagine the scenario where you clean windows as a sole trader and you clean the windows of two shops who operate as limited companies. Are you seriously suggesting that these shops become liable for your unpaid tax in the event of you drinking your income and not paying tax ?

I would suggest you stop giving advice

Well, in that scenario, the two shops aren't acting as an agency.

Chapter 7, Section 44 of the Income Tax (Earnings and Pensions) Act 2003 states

all remuneration receivable under or in consequence of the agency contract (including remuneration which the client pays or provides in relation to the services) is to be treated for income tax purposes as earnings from that employment.

which pretty much stops an agency dealing with a self-employed person.

Would taking on a number of people to work for a client through your company be enough to make the company owned by the OP appear to be an agency in the eyes of HMRC? Since the same act states that the legislation applies where

the services are supplied by or through a third person

then I would suggest that it does.

I would suggest you stop giving advice