You will now doubt have seen the media coverage of the Uber case involving taxi drivers who worked under the company’s name and were treated as self-employed. Given the decision of the tribunal, that most of the time the drivers were working they did so as workers, people need to think of the ramifications of this regarding their own employment status.
Whilst the decision is surely to be appealed, HMRC will be ready to pounce and demand that Uber applies PAYE and National Insurance to drivers’ income and will no doubt apply this to other businesses. It is time to assess the risk.
So, what is the risk? The following might help you to identify arrangements which are, are not, at risk from an attack by HMRC.
1. No Risk
Where a worker provides their personal services through a company or partnership you do not have to worry. The onus rests with them to decide whether PAYE tax and NI applies and pay it.
2. Low or no Risk
You pay an individual for a combination of goods and services, for example, someone who redecorates your offices is not a problem but paying a handy man on a regular basis might be.
3. High Risk
You pay an individual for services only and they work on a continuous or regular basis such as a bookkeeper. In this situation, you should consider whether the terms of work make them an employee.
The simple advice is, if in doubt, consider putting them on the payroll. If you would like to check before doing anything then feel free to contact us here.