We have a consultant working around 4 days a week for the company which generates 85% of his income (he has a limited company paying minimum salary and max dividends).
What are peoples' thoughts/experiences re whether the HMRC will view him as an employee or self-employed
Thanks
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More detail please...
Hi
Is this a regular 4 days, how long has it been going on for/foreseen to continue for, is it a fixed term, work at client premises or own office, input and control over the work etc., etc.?
Hi. I've been through the
Hi. I've been through the various employed v self employed indicators but there still seems to be a lot of confusion and contradiction around this. No fixed term but been going on for about 5 years. Works at client's premises but could do some of the work at own premises, he is the expert for the company so is partly directed and partly reacting to what is needed.
Thanks
If he's trading through a Ltd, the question doesn't arise
The employed versus self employed question is irrelevant if he trades through his own limited company.
The real issue is whether he's caught by IR35 which is similar but subtly different, so make sure you are looking at the IR35 rules rather than the employment status indicator.
Either way, the firm engaging him/his company has nothing to worry about if he's a limited company. It's the worker himself who has to decide on his IR35 status.
VAT
Does consultant charge VAT? Is he registered for flat rate scheme? Depending on exactly which service he supplies, he may be able to increase his effective income by 5.6%
Although this does not prove the IR35 argument, it is still worth looking at.