A director has asked for the use of one of the employees to carry out general maintenance work on his private residence. This isn't a problem as the director has agreed we can invoice him for the relevant hours wages plus the cost of Ers NI and VAT etc
Are there any implications if this became a regular occurence month after month and if in some instances a larger project meant that the employee spent a large % of his monthly contracted hours effectively being contracted out as a general labourer when he is employed in a different role.
Even though all hours will be invoiced to the director which he will pay personally, my concern is that if the employee continually spends a large proportion of his time working for the director then the director would be seen as his employer and he should be operating his own payroll rather than the company. Or the employee could effectively have two employments?
The company is a retail trade so sub contracting out a general labourer wouldn't be classed as part of our general trade, maybe I am over analsying and this wouldn't be an issue with HMRC?
Replies (3)
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Has anyone asked the employee?
I am not sure I would be thrilled to find out that I will not be stocking shelves or manning a till as I had thought but out labouring in the director's garden.
So long as this charged at a market rate then I can't see any tax related problem however the employment law position will be all over the place.
Over analysed
There is nothing wrong with a homeowner contracting with a company to provide a handyman to do work on his home. It happens all the time. It does not matter that, in this case, the homeowner is a director of the company. The details of how the charge is calculated is irrelevant, provided that the rate is a reasonable market rate for the work, so that it is not a benefit in kind. You may need to amend the employee's contract of employment.