Subby self-employed vs employed

Subby asked by HMRC to verify self-employed status

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Apologies if this has been done to death, but I don't have time to read all the threads on this feed.

Subby client has a letter from HMRC regarding self-employed vs employed status.The letter refers to the contractor he does work for, so I guess that is where this is coming from. The letter asks for a "meeting" by phone, but I'm inclined to do this by correspondance.

Yes, he only works for the one contractor, BUT he pays for all his own working costs including using his own van and all attached costs, buys his own tools, protective clothing, insurance, gas safety certification, training.

If not for a large tax bill at the end of January he had planned to take an extended  break over Christmas & New Year; which suggests he has some control over when he works. On the other side of the coin the contractor can simply say - don't come in next week. As happened many times during Covid with no income and certainly no Furlough payments. No employee entitlements such as holiday pay, sick pay, redundancy or any other support or benefits.

I'm wondering if HMRC are having another purge on this; I believe they have tried many times and quite often lost the argument.

I would be grateful for any tips based on practical experience or pointers to HMRC cases.

 

Replies (20)

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By zebaa
20th Jan 2022 10:09

So, just WHAT have you done, other than post ? Have you even run the check list ?

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By I'msorryIhaven'taclue
20th Jan 2022 10:21

The onus is now on the contractor to decide his subbies' statuses, Gerald. It's the contractor who carries the can if HMRC successfully disrupt your subby's self-employed status by deeming him to be an employee. Didn't you hear Boris banging on about an additional 60,000 people in employment in PMQT yesterday?

HMRC would like to get their professional interviewer to grill your client over the blower in the hope of hustling and harrying him into torpedoing his contractor.

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Replying to I'msorryIhaven'taclue:
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By geraldw
20th Jan 2022 10:45

Hi I'msorry

Thanks very much for your reply.
I guess the next stage is a discussion between my client and the contractor

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
20th Jan 2022 12:08

Agree
Probably the contractor is being looked at and HMRC are looking to have an unsupervised "meeting" with op's client
OP's client does not need to agree and should avoid
Let HMRC find some other subbie that will say the wrong things or agree HMRC comments

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Replying to Paul Crowley:
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By I'msorryIhaven'taclue
20th Jan 2022 12:31

It's bad news for the subby though, as he'll possibly suffer the collateral damage of ending up out of work.

Boris was also banging on about hosing targets being exceeded, during PMQT yesterday. But it's hard to see how that'll happen with HMRC tinkering with construction industry practices that go all the way back to the lump. Maybe nobody's told Boris!

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By More unearned luck
20th Jan 2022 13:18

The position is as I'm Sorry says. HMRC are looking for ammunition against the engager. You make it sound as if HMRC are being disingenuous, which might be a correct impression.

" As happened many times during Covid with no income and certainly no Furlough payments. No employee entitlements such as holiday pay, sick pay, redundancy or any other support or benefits."

That ain't necessarily so as Sportin' Life sang. Your client should explore the possibility that he is a limb b worker (as were the subbies of Pimlico Plumbers and some Uber drivers). Limb b workers qualified for furlough pay, but its too late for the engager to claim now.

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By Catherine Newman
20th Jan 2022 14:24

A retired accountant friend said the solution to this it to offer them the phone call in the early hours of Sunday morning.

Joking aside, you have given enough information to justify self-employment.

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Replying to Catherine Newman:
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By geraldw
20th Jan 2022 14:32

Thanks to you, and to other contributors.
I have asked my client to have a word with the contractor.

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By Paul Crowley
20th Jan 2022 14:31

There was incredibly generous SEISS support for the self employed
Nigh on every full time self employed ended up better off and higher taxable income as a result of the pandemic

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Replying to Paul Crowley:
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By geraldw
20th Jan 2022 14:38

Can't say that I agree with any of this in my experience. But SEISS is an argument for another day.

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Replying to Paul Crowley:
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By Catherine Newman
20th Jan 2022 17:21

Not to mention some went into HICBC like some of mine. But now we know the scale of fraud but that's another story.

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Replying to Catherine Newman:
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By I'msorryIhaven'taclue
20th Jan 2022 18:18

I recall an article highlighting the really high marginal rate clawback 60%+ when they only just cross the HICBC threshold, nes't ce pa?

Worth returning a little SEISS?

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Replying to I'msorryIhaven'taclue:
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By lionofludesch
21st Jan 2022 07:48

I'msorryIhaven'taclue wrote:

I recall an article highlighting the really high marginal rate clawback 60%+ when they only just cross the HICBC threshold, nes't ce pa?

Worth returning a little SEISS?

Who wrote the article? Boris?

Depends on how many kids you have and whether you cross the HR threshold too.

On HICBC alone, you'd need about 9 kids for 67%. Throw in higher rates and you only need three.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
21st Jan 2022 08:08

lionofludesch wrote:

Who wrote the article? Boris?

Ha ha, do I detect a little scepticism as to the validity of that claim!

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Replying to I'msorryIhaven'taclue:
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By lionofludesch
21st Jan 2022 09:00

No, it's easy enough to work out. CB is about £1000 for the first kid and £750 after that. Nine kids would be £7000, spread that over the £10000 transitional band gives you 70%.

But if you throw in 40% tax and 2% NI, you only need three kids to hit your 67% rate.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
21st Jan 2022 09:21

Doh, I meant because if Boris wrote it then it can't be true... oh, please yourselves!

Yes, I see what you mean though... I looked up the article last year because a 40% client with a K code went deeply into the transitional band courtesy of his company car (a big 2008 Merc with fuel - ouch!) BIK, and I couldn't quite believe the marginal tax rate he'd ended up with. (And before you ask why pay all that BIK on a Merc you could buy for a couple of grand, it's not his company so he was stuck with it.)

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
21st Jan 2022 12:31

".. not his company so he was stuck with it"

Guess it depends on that company's rules (not many force you to take a car) ... but then again sometimes the rules aren't written down. I can remember, shortly after joining a company and getting it to buy a (secondhand) car for myself, being taken to one side by the MD ... "I know you Finance bods all think you're clever, but you do NOT get a better car than the MD - even if it cost less than his!"

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Replying to lionofludesch:
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By Catherine Newman
21st Jan 2022 19:00

Got it. You are asking how many children has Boris fathered? Nice one.

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Replying to Catherine Newman:
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By lionofludesch
21st Jan 2022 19:22

Catherine Newman wrote:

Got it. You are asking how many children has Boris fathered? Nice one.

Nobody knows the answer.

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Replying to I'msorryIhaven'taclue:
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By Catherine Newman
21st Jan 2022 18:54

I agree. We were cut out of the claims process, got nothing and "it was free money". I see Rebecca Cave has issued an article today. Jimbob doesn't recognise us but expects us to help our clients when we weren't entitled to it. Do we lose clients by reporting them? I live in a small village (Dumbleton-just outside the Cotswolds) with a big cricket club that plays far and wide (including getting into the final Village Knockout at Lords many years ago but lost due to bowling at stumps due to the rain). Good job we didn't go to that match although we went to all the others. My daughter started Middle School two days later. "Cathy Newman dobbed me in to HMRC re my grants"- I don't think so.

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