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Ex-Employee working as Self Employed Contractor

Payroll or Invoice

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I have an ex-employee from about 2 years ago that was on payroll and but left due to their fixed term contract coming to an end.

They are now going to be working for us for 1 month only, providing site supervision.

Please can anyone advise whether they should go on payroll for this work, or if an invoice can be accepted for the work.

Would HMRC see them as being employed  by us temporarily or a self employed person?

Any advice would be appreciated

Replies (6)

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By WhichTyler
04th Nov 2019 21:20

Strictly it depends on all the terms of the contract, not just the length

Have a look at this and see what it says...

https://www.tax.service.gov.uk/check-employment-status-for-tax/reason-fo...

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By WhichTyler
04th Nov 2019 21:20

Strictly it depends on all the terms of the contract, not just the length

Have a look at this and see what it says...

https://www.tax.service.gov.uk/check-employment-status-for-tax/reason-fo...

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By Accountant A
04th Nov 2019 21:50

You need to speak to your HR department and/or legal team. The issues extend beyond tax - eg employment law, health and safety (probably), etc..

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By David Heaton
05th Nov 2019 10:46

A word of caution. If the worker is also doing other things while working on a temporary contract for you, you can't rely on the HMRC CEST tool, as it doesn't ask the appropriate questions to establish whether the worker is in business on his/her own account, nor does it approach the question of the type of mutual obligations correctly.

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By badgmalt
06th Nov 2019 12:36

David Heaton is right - don't use CEST; if you use it, particularly as the sole determining tool, you run the risk of HMRC accusing you of not using an appropriate level of care in making a determination.

Also, take care of the professional advice you seek - this is a notoriously difficult area of employment law as well as tax law where many get it wrong (as HMRC have demonstrated many times themselves).

As an alternative to CEST try a comprehensive tool such as IR35 Shield

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By pauljohnston
06th Nov 2019 18:13

I believe IR35 only applies to contarcts of one month or more. From a practical point of view the work involved in setting up PAYE for one month would lend me to suggest self-employment. But if insurance is required then the employer will need to look at the cover

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