Tough new rules designed to stamp out false self-employment kicked-in in April 2014, and their impact is beginning to emerge.
So if you pay your subbies via a payroll company or an agency, there could be big trouble ahead.
Onshore Employment Intermediaries – OEI – outlaws individuals being categorised as self-employed with the help of an intermediary when the reality is that they should actually be classed as employees.
Your intermediary is legally required to demonstrate that none of your operatives who are paid outside PAYE have been subject to supervision, direction or control. In short, compliance with the reporting requirements is onerous.
OEI definitely has teeth, so to avoid falling foul of HMRC many intermediaries have erred on the side of caution and/or taken the easy option, by deducting tax and national insurance regardless of the nature of the work being undertaken. Result? Operatives receive an instant pay cut, resulting in an unhappy workforce, which is not what your business needs. Or in some cases intermediaries are falsely claiming to be 'commercial contractors', 'project management' firms or by saying they 'tender for the work' under sham contracts.
Has your intermediary told you clearly and unambiguously how it is coping with OEI? And do you have a strategy in place, in case they fail to comply?
We worked for many months with one of the ‘Big Four’ accountancy firms to ensure we comply with the requirements of OEI, accurately engaging individuals based on their workplace circumstances. And ensuring those who are genuinely self-employed remain self-employed – and are not forced into false employment.
Watch our video now for the full story.
The good news is that you can forget about OEI . . . but you might face other risks.
HMRC can – and frequently does – challenge the self-employment status of operatives reported on the CIS300 return. Get the status wrong, and you will be fined and liable for backpayments of national insurance plus interest.
Check your liability here
Whether you use an intermediary or pay your subbies directly, Hudson Contract can help.
Run your numbers through our liability calculator and see how big a risk you are taking.Click here