Substitution – to a “sole trader” ?

[Sockpuppet]

Phu , sounds like a complete law non-sense. How my Ltd would be responsible for someone else’s unpaid taxes ? Go chase them not my Ltd.

You serious need to do lots more reading.

The reason agencies want you to be PAYE or Ltd. If they allowed SE them we'd all be self employed and claiming mortgage as business payments.

[2uk]

The last link in the chain gets clobbered for any unpaid tax or NI - so if you pay a sole trader to do the job, and they don't pay tax, then HMRC will come to you for it.

This is one reason that agencies will only deal with a Ltd company - they can't be hit for your unpaid taxes, the company that employs you is.

There is nothing to stop you from employing a sole trader, but you may be leaving yourself wide open for paying their taxes.

Phu , sounds like a complete law non-sense. How my Ltd would be responsible for someone else’s unpaid taxes ? Go chase them not my Ltd.

[TheFaQQer]

Pretty sure that would be illegal.

Don't think it is - you are paying them, it's up to them to declare it. However, if they don't then the tax man will come to you for their unpaid taxes.

[TheFaQQer]

The last link in the chain gets clobbered for any unpaid tax or NI - so if you pay a sole trader to do the job, and they don't pay tax, then HMRC will come to you for it.

This is one reason that agencies will only deal with a Ltd company - they can't be hit for your unpaid taxes, the company that employs you is.

There is nothing to stop you from employing a sole trader, but you may be leaving yourself wide open for paying their taxes.

[2uk]

But to answer the original question, why not pay them cash in hand? It means that you can't offset those payments against income, so your tax bill would be higher - but you could pay them much less.

The idea with the sole trader is not to pay them cash ( behind the counter ) but to avoid them setting up an Ltd – in the case where they are foreigners.

[Sockpuppet]

Surely what matters to the client is whether the work gets done. Who does it is not a concern to them.

It would be nice to think that happens wouldnt it. Lets face it they expected "you" when you interviewed not someone else.

But to answer the original question, why not pay them cash in hand? It means that you can't offset those payments against income, so your tax bill would be higher - but you could pay them much less.

Pretty sure that would be illegal.

[KentPhilip]

As much as all you IT guys are having the brilliant ideas to "get cheap foriegn monkeys" in to substitute. I would bet that your substitution clause doesnt mean anything - its only written and they would be less than pleased to find you using it.

Surely what matters to the client is whether the work gets done. Who does it is not a concern to them.

Unless they are complete A**H*** bosses who want to "lord" it over you as your boss. In which case I would be delighted to put them in a state of being less pleased...

But to answer the original question, why not pay them cash in hand? It means that you can't offset those payments against income, so your tax bill would be higher - but you could pay them much less.

[Sockpuppet]

They could still leave you liable for the PAYE due. You could just take them on on fixed term contracts or contracts with no guaranteed hours, take the PAYE so you are not liable.

If you do you need an accountant/lawyer though - if you fekc it up can cost you big.

As much as all you IT guys are having the brilliant ideas to "get cheap foriegn monkeys" in to substitute. I would bet that your substitution clause doesnt mean anything - its only written and they would be less than pleased to find you using it.

[2uk]

If they dont pay NIC then I believe that you are liable for the NIC and Income Tax.

Also they need permits. Need to prove they are not avail in the UK skills market.

In short its not that easy as you think.

You can source staff from all EU countries and they do not require Visas . These guys will not be familiar with UK employment requirements. The idea is to get them on board when required, without being obliged too much – as with employing them.

[Sockpuppet]

If they dont pay NIC then I believe that you are liable for the NIC and Income Tax.

Also they need permits. Need to prove they are not avail in the UK skills market.

In short its not that easy as you think.

[2uk]

Is your Ltd at a higher risk if you sub-contract to what is legally known as “sole-trader” , not a contractor with a Ltd. I wonder what the complication would be. The reason a “sole trader” is an option because it is a way to get cheap foreign monkeys on a project.