Tutoring service - taking on other tutors

Tutoring service - taking on other tutors

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I know someone who is has started up their own tutoring service to pupils through advertising online.

Due to referrals, uptake has been bigger than anticipated, and she is considering advertising for other tutors so she can meet all of the demand.

She is considering taking a proportion (say 30%) of the tutoring fee for herself, with the rest received by the tutor.

Is this a simple structure? I suspect that it probably is, with herself and her tutors all self employed and declaring the income that they receive. However is there any other considerations that need to be made?

Thanks in advance for your help

Replies (2)

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Stepurhan
By stepurhan
27th Dec 2011 11:54

Employment and VAT issues

Your client is doing the advertising and acquiring the pupils. She is also presumably responsible for which tutors handle which pupils. If that is correct then it sounds like the other tutors are, at best subcontractors. There also appears to be a significant risk that, despite them being registered as self-employed, HMRC will consider the other tutors as employees, albeit very well paid ones if they are getting 70% of the fees clients pay.

You need to look very carefully at the arrangement between your client and the other tutors. Can they refuse tutoring work? Can they provide a substitute? Where and how are the tutoring services supplied? (i.e. Does it take place at your client's premises using your client's equipment, a further indication of employment rather than self-employment).

Even if you get over the employment hurdle, you may still have a problem with VAT. The arrangement still sounds like your client procuring pupils on their own behalf, some of which they then subcontract to others. This means they are acting as principal for ALL pupils, not just the ones they actually teach themselves. Therefore 100% of ALL income needs to be taken into account for VAT purposes, not just the 30% retained on those passed on to other tutors. How much of a concern this is will be dependent on what sort of tutoring is being supplied.

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By Richard Willis
28th Dec 2011 09:54

Another consideration

Is the principal going to CRB check all the subbies?  If an issue arises they may otherwise be held liable!

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