self-employment question

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self-employment question

Postby DasNutNock on Tue Oct 02, 2018 11:46 am

I've got a mate that's a chippy by trade, and he's (as far as I can tell) employed by a small business owner as part of a team that is moved from project to project as & when required. He, along with the rest of them, appear to believe they are self-employed, despite the business owner paying them their wages, and retaining 20% of it (presumably this forms part of their annual tax return). They don't get sick pay, and they don't seem to know if he's paying NI for them - and they most definitely don't get a company pension. I'm not sure they even have a contract with the owner.

Does that sound right? The consensus seems to be that this is the norm for their line of work, but it sounds to me rather like they're being a bit shafted here, at least as far as NI & pensions are concerned. I thought everyone that was an effective employee was meant to be offered a pension, for example. Seems to me that he's circumvented employment laws by making them pretend to be self-employed.
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Re: self-employment question

Postby DasNutNock on Tue Oct 02, 2018 11:57 am

OK, a bit more reading suggests they may constitute CIS Subcontractors - any idea if they get holiday pay & pension contribs?
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Re: self-employment question

Postby sendô on Tue Oct 02, 2018 12:02 pm

Sounds like he's shafting them. If they're self employed, then he shouldn't be keeping 20% of their wage to pay their tax - they should be putting that aside themselves and consulting an accountant.

I reckon he's trousering that 20% himself, and they're all running the risk of getting picked up by HMRC.
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Re: self-employment question

Postby somerset-hammer on Tue Oct 02, 2018 12:03 pm

Sounds like they are self-employed sub-contractors. The company they work for should be paying them their rates without taking deductions though, that's down to the individual to sort out paying tax etc, they should also be providing invoices for all work carried out.

Sounds like something dodgy going on from the employer, to me. Taking 20% out of their pay packets, not paying PAYE, tax or NI either I wouldn't have thought.
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Re: self-employment question

Postby sendô on Tue Oct 02, 2018 12:05 pm

Yes, if they are self employed then they are effectively sub contracting their labour, and so should be issuing an invoice each week that the employer pays against.

If he's holding back wages then he should be issuing payslips proving he's paying tax and NI as I understand it.
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Re: self-employment question

Postby DasNutNock on Tue Oct 02, 2018 12:19 pm

This CIS subcontractor thing seems like b*llocks to me. They get none of the benefits that a recognised "employee" does like holiday pay, or a pension, but are expected to jump through all the hoops. It's only the contractor that wins, by swerving NI contribs for the subbies.
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Re: self-employment question

Postby The Old Man of Storr on Tue Oct 02, 2018 12:26 pm

A couple of the lads who are part of our builder's team have gone down the self employed route as it gives them the freedom to work for him or not - they get paid a wage but next time I see them I'll ask about the 20% bit , sounds wrong to me - unless they're paying into a pension scheme ?
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Re: self-employment question

Postby Harry Hound on Tue Oct 02, 2018 12:33 pm

It appears that the construction industry has different rules and requirements.
https://www.gov.uk/what-is-the-construc ... try-scheme
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Re: self-employment question

Postby Clacton-ammer on Tue Oct 02, 2018 12:35 pm

How long has mate worked for the same company? This could be important along with has he done any other jobs, if they be private or for another company? If so, has he issued an invoice for other work?

From what you have said so far, there seems to be many things wrong from what you have written. He must go and ask about what the 20% deduction is as a start point.

I would not be surprised if he said "finders fee" for work given to him, I have seen this before, meaning your mate has been shafted.

Or, firm he is working for is legit and just very bad at administration/legal...
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Re: self-employment question

Postby DasNutNock on Tue Oct 02, 2018 12:40 pm

So it seems this:

1. The 20% deduction is paid by his boss (The "CIS Contractor) and given to HMRC on behalf of him and the rest of the team (The "CIS Subcontractors"). You can request to be exempt from this and pay your own tax bill.
2. He doesn't get a payslip - he has to invoice his boss, and gets receipts.

Frankly, I don't understand how points 1 and 2 can coexist. If his boss holds back the 20%, then why isn't he getting a payslip? He appears to be okay with all this, and insists this is normal for the industry, but it still seems iffy to me.
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Re: self-employment question

Postby somerset-hammer on Tue Oct 02, 2018 12:41 pm

Harry Hound wrote:It appears that the construction industry has different rules and requirements.
https://www.gov.uk/what-is-the-construc ... try-scheme" onclick="window.open(this.href);return false;


Sounds like it could be this.
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Re: self-employment question

Postby Clacton-ammer on Tue Oct 02, 2018 12:43 pm

At least he isn't being stung! :thup:

My mates register, saves money allegedly.
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Re: self-employment question

Postby somerset-hammer on Tue Oct 02, 2018 12:44 pm

Clacton-ammer wrote:At least he isn't being stung! :thup:

My mates register, saves money allegedly.



Would save on having an accountant, I assume.
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Re: self-employment question

Postby DasNutNock on Tue Oct 02, 2018 12:50 pm

But he still has to do a tax return to pay his own NI contribs, and presumably to either recover some income tax if he's had a bad year (or possibly pay more if he's had a very good one).

Thing that bothers me is that he's not getting a payslip, he's getting a receipt for his invoice. Doesn't sound right to me.
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Re: self-employment question

Postby FreeWheeling on Tue Oct 02, 2018 1:19 pm

Could just be the way the building industry work , But I know not of a single contractor paying anywhere near 20% where we are
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Re: self-employment question

Postby The Old Man of Storr on Tue Oct 02, 2018 1:28 pm

DasNutNock wrote:
Thing that bothers me is that he's not getting a payslip, he's getting a receipt for his invoice. Doesn't sound right to me.


Doesn't sound in the least bit suspicious , Dan .

Jen , my Mrs went self employed when she did some Post Office work up here on Skye , she was offeed another job in a newly built ' Hub ' where they installed the new Post Office , she was given the choice of remaining self employed or going on their books , she chose to remain self employed - she gave in her invoice each month and got paid straight into her bank account , no payslip , no receipt , I guess she uses her Bank Account as proof of payment - never any bother but we do know everyone involved .
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Re: self-employment question

Postby mushy on Tue Oct 02, 2018 1:39 pm

The Old Man of Storr wrote:
Jen , my Mrs went self employed when she did some Post Office work up here on Skye , she was offeed another job in a newly built ' Hub ' where they installed the new Post Office , she was given the choice of remaining self employed or going on their books , she chose to remain self employed - she gave in her invoice each month and got paid straight into her bank account , no payslip , no receipt , I guess she uses her Bank Account as proof of payment - never any bother but we do know everyone involved .

But I assume that as she is self-employed she pays her own tax?
This is different from the Dan example, in his case his mate is deducting 20% for tax.
I.am bloody sure he should be getting a pay advice slip which clearly states his tax code and his monthly tax and NI contributions.
How else would he be able to challenge HMRC in any tax disputes, how else can he prove he has made NI contributions and be entitled to a full state pension?
As the son of a former Inland Revenue Tax inspector, I am shuddering at this state of affairs.
Stop booing at the back please.
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Re: self-employment question

Postby DasNutNock on Tue Oct 02, 2018 1:43 pm

^
That's the thing - he's not getting a payslip, he's getting a receipt. I don't know exactly what the difference is, but I don't understand why he doesn't get a normal pay slip if his boss is holding onto, and forwarding, his 20% income tax to HMRC. Surely, only full-blown contractors get receipts, for the full gross amount, and handle their own tax return in full.

Like I say, he seems to think this is all quite normal and appears broadly happy with his situation, but I just want to make sure he's getting all the perks he's due under CIS terms. He told me that his mate got injured and was off work for 6 months, and the boss paid his mortgage for him during this period, which seems very generous and probably quite atypical, so he does sound like he's getting taken care of. But a few grand on mortgage repayments could well be insignificant when set against many years of lost protection, insurance and peripheral things like sick/holiday pay & pension contribs.
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Re: self-employment question

Postby Johnny Byrne's Boots on Tue Oct 02, 2018 2:29 pm

How does his 'employer' deal with the personal allowance and NI?
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Re: self-employment question

Postby somerset-hammer on Tue Oct 02, 2018 2:31 pm

Is he paying tax, (that he knows of) Dan?
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