The Framers Forum

Does anyone employ freelance workers?
I have found just the right person to work with me for a few hours each week. She is a self employed author and illustrator for part of the week ( and has a business to back it up) and part time teacher with a local authority contract etc.
Is there any reason she can't invoice me for the hours worked as a freelance worker, what are my resposibilites other than health and safety etc.. I can only find the definition of a contractor or freelance worker on the gov website not any details of what I should do as the employer.
Any ideas, pitfalls of this style of employment etc?

I would check with your accountant. If I remember corecorrectly if you employ a freelancer as a sales person for arguments sake and you provided them with office space, computer and phone then you need to charge them for use of those facilities. That was the way of getting round it as hmrc doesn't like freelancers as it's a way of getting round NI contributions.

How you would work it in a manufacturing scenario I don't know, but ones things for sure hmrc won't like it especially if the freelancers company is registered as an educational company or an illustration company as that has nothing to do with picture framing.

As far as I know if she is invoicing the other businesses and paying her own tax then she can invoice you as well, especially as you are not the largest source of her income. As I understand things if she says I am a business and here is my invoice you are in the clear.

I am not sure that HMRC can dictate what you actually do for a living? If you do a day a week as a teacher, a day as a salesman, a day as a cleaner (etc etc) that is up to you, you just need to give each customer invoices, HMRC they are only interested in your declaring the income and paying the taxes. I think thats the way it goes, but best to check with the accountant.

Well they are interested as you avoid paying ni if it is a limited company. They clamped down on it in the construction industry big time.

They clamped down on the construction industry as there were loads of self employed builders who actually only worked for one company so HMRC changes the rules to say you cannot be self employed if most of your income comes from one company. The changes affected me as at the time I was sales director for a company, but actually billed them from my own ltd company of which my wife and I were the 2 directors, a nice way of halving the income! So not only were the rules changed to stop that from happening, they also stopped wives being able to work for an hour a week for half the income.

Last year I had an illustrator work 2 days a week with us and he invoiced us as he did his other customers. Provided he is legitimately registered as self employed my understanding is it should be fine.

check out this thread, just over 2 years old

http://theframersforum.com/viewtopic.php?f=9&t=10522

The illustrator who did some work for us did not work set yours, they varied week to week depending upon his workload. I guess, as it was never going to be something that went on for years it also helped to fit the self employed rules set out in that old thread.

"Employing freelance workers"

Either they are freelance and work for themselves, or they are employed by you. You have - inadvertently - hit upon the area of confusion.

HMRC have a publication "employed or self employed". I don't know what this person is doing for you, but my suspicion is that they will turn out to be your employee.

Start here. http://tools.hmrc.gov.uk/esi/screen/ESI ... user=guest (the answer to the first question about the 'customer role' is 'engager' as by 'customer' HMRC mean the person asking the question). Sit down quietly and answer the questions, as they're not that helpfully written and you need to focus on whether they are referring to the 'worker' or the 'employer'.

If the worker has their own company, then you can quite safely engage the company to do the work. It is then the individual's own problem, as director and shareholder of their own company, what to do with their tax status. IR35 then potentially becomes a problem for the individual, so they have to pay their NI.

(By way of finishing this piece of detail, you cannot pay somebody through a company if they are an 'office holder' in your business. So your company directors, for instance, cannot work through a personal service company.)

It is, by the way, your responsibility as the employer to get it right. Not the employee's responsibility. If you get it wrong then HMRC will charge you penalties and interest (as well as the NI and PAYE you owe). The only circumstances under which I would take a person on as self employed in the circumstances you describe would be with a clause in the contract entitling me to claw back any sums - including interest and penalties and the costs of dealing with HMRC - that I might suffer if their status as self employed were to be challenged. I bet if you try to put that into the contract they will accept they are employed and you operate PAYE on their payments.

That is pretty much how my understanding of employment law goes James.

I went through the same thing a while ago, a photographer asked me if he could work a few days per week on a self employed basis, when I looked into it, he couldn't I had to employ him.

That is they way I read it as well especially as they are working from your premises using your equipment.

(This sort of thing is my day job...)

Now that doesn't surprise me. Some howI didn't think your were a framer full time

You knew *that*!

Both of my part timers have other jobs and I asked HMRC to clarify the situation. They told me that I could not as a self employed person employ another self employed person unless I deduct tax when paying them.

There are specific rules which let you out of this, such as if the employee is your wife, but generally they've got most angles covered by their rules, which I assume will be backed up by something legal as well.

It one of those strange set ups where they make and interpret the rules and you can't argue with them unless the matter goes to court. Considering the govenments current finacial difficulties, I think that will be interpreted for their benefit, not yours.

Not your average framer wrote:Both of my part timers have other jobs and I asked HMRC to clarify the situation.

Well they failed! No surprise there.

They told me that I could not as a self employed person employ another self employed person unless I deduct tax when paying them.

You cannot 'employ' a 'self-employed' person by definition. As self-employed, they are their own employer, so they cannot be employed by somebody else. What I think you mean is that if a self-employed person employs somebody else then they have to deduct PAYE and NI.

There are specific rules which let you out of this, such as if the employee is your wife,

Absolutely not so. Your wife is only exempt if she is taxed as a partner in the business. She is not your employee.

I have had this discussion with HMRC. I do not have to deduct PAYE, or NI from my own wife. I do have to make deductions from the part time staff although they both work as self employed when they are not working for me. I cannot get them to invoice me and I just pay their invoice, that's the law.

I had better tell my accountant to stop taking tax of my good lady.

If you are a LTD then you should have given shares to your wife and make her a director to lower the tax burden, especially now as the tax on dividends is coming in, you need to use up all potential tax allowances that you can.

I was just joking, she is a director.