Reply to: Hiring self employed contractor

[centurian]

- as TykeMerc said, we don't want a right of subsititution

Why not allow him to have the right, thus keeping him happy, but drop hints that if he uses it - his termination clause will be invoked. That's the kind of stand-off that most of our substitution clauses are anyway. Often if we actually did send in someone else, we would get a phone call from ClientCo saying "get the tulipe back here, or you're sacked" kind of message.

HMRC also know this full well, which is why they try to drive a wedge into the clause and work out if you could actually, realistically substitute without causing a stink. In the most cases the answer is probably no, but HMRC need to prove this.

[Gonzo]

<snip>

You must really like this Matsui company because you seem to mention them in just about every post you make.

[Limited]

BGG: No, I used the pronoun "he" because the guy we want to hire is male. Useful post though. Thanks.

[Board Game Geek]

OP : When you say "he" in your previous posts, I take it either this position is part of a positive gender discrimination role or you were just using the pronoun loosely ?

[saigon triumph]

I had a similar problem but i was the self employed person. It was only a short contract and i wanted to stay self employed so as not to have IR35 problems.

If the person wants to stay self employed then i suggest trying an alternative umbrella type company such as the one i used www.mitsulimited.co.uk. They offer a limited Co solution for self employed people which would allow you to offset the problems of dealing with self employed but still enable you to hire them. I managed to split the cost with the client which they were happy with as they didn't have to pay N.I as you said. It also solved the problem that i didn't have to be employed by them.

[Limited]

Ok. I've done some reading around and it looks like the self-employed option can't really be done along the lines of what we are looking for.

So we are looking at additional costs of 12.8% employers NI + a small fee from our accountants for adding to the payroll + hassle and headaches of employment contracts, sick pay, insurance etc

Or

Using an umbrella which will save us the small fee from the accountants and the headaches and insurance issues but cost £100ish per month. (Employers NI to be paid by the contractor rather than us, but we would have to sort out some arrangement about that)

Does that sound right? Thanks

[Moscow Mule]

I am not saying it can't be one of self employment, just (very) unlikely that it will be. The guide I mentioned can easily be found on HMRC web site, it really is a good starting point. IR35 is irrelevant effectively in the scenario you describe. Either he is your actual employee or he is self employed.

ir56.pdf doesn't seem to be available any more...

[ASB]

Thanks

So what you're saying is that as soon as we want customers to think that he will be part of our company (even though he is actually acting as a consultant), then the relationship can't be one of self-employed?

Any ideas of where I can go to get some more help with this? Would the usual IR35 specialists deal with this sort of question?

I am not saying it can't be one of self employment, just (very) unlikely that it will be. The guide I mentioned can easily be found on HMRC web site, it really is a good starting point. IR35 is irrelevant effectively in the scenario you describe. Either he is your actual employee or he is self employed.

[Limited]

Thanks

So what you're saying is that as soon as we want customers to think that he will be part of our company (even though he is actually acting as a consultant), then the relationship can't be one of self-employed?

Any ideas of where I can go to get some more help with this? Would the usual IR35 specialists deal with this sort of question?

[ASB]

Thanks all for your help

To clarify, the contract with the end client is completely is outside ir35. My concern is his contract with us.

Two issues that worry me are
- we want him to appear to the outside world as part and parcel of our company.
- as TykeMerc said, we don't want a right of subsititution

Surely these issues would be a concern if a ltd co subcontractor so is it different for a self-employed person?

And a long shot, can anyone recommend a standard contract for this sort of thing? I'm guessing this might be outside the usual standard contractor contracts

If you actually WANT him to appear as part and parcel do not even think about employing them as SE. Read IR56. When you lose the status enquiry - which you will if you described the above - then the payments to him will be treated as NET employment income, i.e. this will be back calculated including NI, ER NI and PAYE into a gross payment. You will then have to hand that over + Penalties.

[Limited]

Thanks all for your help

To clarify, the contract with the end client is completely is outside ir35. My concern is his contract with us.

Two issues that worry me are
- we want him to appear to the outside world as part and parcel of our company.
- as TykeMerc said, we don't want a right of subsititution

Surely these issues would be a concern if a ltd co subcontractor so is it different for a self-employed person?

And a long shot, can anyone recommend a standard contract for this sort of thing? I'm guessing this might be outside the usual standard contractor contracts

[TheFaQQer]

You might also want to check your own / their insurance policies if you are taking them on as a contractor rather than an employee.

[NotAllThere]

When you wrote the contracts for ltdco subcontractors, you applied certain criteria to make sure that they didn't fall under IR35. You only need to apply the same criteria to a self-employed person, and you shouldn't have a problem.

IR35 means - would the person be an employee for the end client if they were contracted direct as a self-employed.

[TykeMerc]

1. We see the best way of doing this being on a self-employed basis as it will probably be short term and he doesn't have a ltd company.

2. My only experience of hiring subcontractors is through their own ltds. I know agencies won't deal with self employed, but is there any reason why we cannot?

3. I guess it needs to be a genuine self-employed situation, but are the questions the same as for hiring a ltd? Eg not sure we want or need a right of substitution in there.

1. Fine, perfectly reasonable.
2. Nowt to stop you
3. You're taking a small risk over the person not paying their taxes, but you can help that with a sensible contract. You definitely don't want a right of substitution in this persons contract.

[Limited]

Fairly confident that he will pay his taxes as self employed.

Main worry is whether he might be viewed as an employee and I guess we would have additional NI to pay.
On most of the IR35 type issues I think he would be viewed as self-employed, but as a sales person or when acting as a consultant, we would want him to appear to be part of our company (eg business cards, email address etc). In a quick look at sample self-employed contracts they appear to stress that the consultant must not make themselves out to be part of the company.

If on the pay-roll then I guess we need to start thinking about all sorts of employment related issues, proper employment contracts, holidays etc.