Potential new client

Potential new client

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We have been approached by a potential new client.

Potential client is a commercial airline pilot who who has been looking for contract work.

He has managed to find a 3 year contract with a non-EU airline. Well he has an 'independent pilot agreement'  with an agency who have an agreement to provide flight crew for the airline.

He would be living abroad for most of the year and accommodation would be provided for him.

He tells me the contract has been looked over by a friend who deals in contracts and there is enough scope for him to be self-employed rather than an employee.

He has sent through a copy of the agreement for us to read through. There is a section on the pilot being an independent contractor and not an employee. He is responsible for his own taxes and indemnifies the agency for any tax liability and other expenses.

However the contract states he cannot fly elsewhere without written consent of the agency and the airline. Included in the schedule for pilot services are that the crew member shall be directed by the airline with respect to duties, hours, training courses, rest and rostering.  

Benefits are provided - sick/annual leave. Medical/accident insurance. Travel and accommodation entitlement.

Payments to crew members are Basic salary - A fixed amount every month with tax on the foreign income deducted at source meaning payments are received net. Crew members are responsible for tax outside the country.

There are however financial penalties for taking too much sick/annual leave and if he terminates the agreement early he is subject to a compensation payment to the airline. He also has to pay a bond to the airline that he would lose if he terminated the agreement early.

I am no legal expert but it would appear that he could be classed as an employee but there are financial risks involved in accepting this contract and it clearly states he is an independent contractor and not an employee of the agency (but not the airline!).

He is keen to be self-employed to claim expenses but he will have to be VAT reg'd (although outside the scope). 

Self employed/ employed? Would be grateful for some input/advice on this one as I seem to be conflicting with myself on this!

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By Stuart.thomson
08th Jun 2015 14:28

I think he is an employee but has certain industry specific entitlement to expense deductions.

There is also case law on the training bond helpfully summarised by HMRC. EIM50065

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Glenn Martin
By Glenn Martin
08th Jun 2015 14:45

Is the restriction

about flying for other companies not a legal requirement around total number of flying hours you do, like a Tachograph for lorry drivers as oppose to a restriction of trade.

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