Trucker-Millward:
How’s he breaking law by getting drivers who are self employed to work for him?
Why would I walk a away when he’s going to train me up and get me qualified (PDP) and finally get my foot in the door of the Petroluem industry. Lol
You won’t fit the HMRC definition of self-employed therefore you open yourself up to a whole of misery tax wise, Read this and then tell us wether you reckon you meet the criteria for being self employed as defined by HMRC.
"HM Revenue & Customs are not always unbiased in their assessment of self-employment status and their interpretation of case law. They often place emphasis on reclassifying individuals claiming to be self-employed. HMRC have published two leaflets (ES/FS1 Employed or self-employed for tax and National Insurance contributions and ES/FS2 Are your workers employed or self-employed for tax and National Insurance contributions). [links to PDF documents] which set out a series of questions to test the particular circumstances of any working relationship.
What are the practical differences?
Employees are taxed under the PAYE system and are liable to Class 1 national insurance (NI) contributions. If the worker is an employee, the employer also has to pay Class 1 NI � over a limit set each year, the employee’s NI rate reduces to 2%, but for employers NI continues at the full rate, with no upper limit. The employer also assumes responsibility for paying Statutory Sick Pay and Statutory Maternity, Adoption or Paternity Pay.
Employees have rights under health and safety and employment laws, such as the rights to redundancy payments and not to be unfairly dismissed. Moreover, the range of social security benefits is greater for employees than for the self employed.
Self employed workers are taxed under self assessment, and are allowed more scope in claiming expenses. They also pay Class 2 and Class 4 NI contributions, the combined burden of which is lower than Class 1 NI. Their ‘employers’ are not subject to NI.
It is not surprising, therefore, that many businesses show a marked preference for self employment status for their workers!
What if you are wrong?
It is the responsibility of the person making the payment to get it right. If you treat a worker as self employed and he or she is subsequently ruled to be an employee, you could find that all the payments you have made will be treated as net payments, and you will have to pay the corresponding tax and employees’ NI, as well as the employer’s NI. You have no right in law to recover such items from your employees after the event. In rare circumstances that HMRC cannot recover from the person making the payment they may seek recovery of additional taxes and NI from the worker.
You may also have to pay interest and penalties for incorrect returns.
Can you create conditions to favour self employment?
If you want to substantiate a classification of a worker as self employed, we strongly recommend that you have drawn up and enforce a suitable contract defining the services provided. In line with the tests referred to above, you will need to give particular consideration to the following points:
Risk and Reward
One of the main requirements is that self employed workers bear some element of risk in the arrangement. Whenever possible this is best demonstrated where work is undertaken on the basis of a �price for the Job�. Ideally the price, scope, and timing of the work should be agreed, and evidenced in writing, before the job commences.
Control
Self employed workers should exercise a significant degree of independent control over how they organise and carryout their work
Workmanship
Within reason, the more freedom the worker has in the detail of the way the work is carried out the better. You must also make it clear that the worker will have to put right any faulty work at his or her own expense.
Substitution
One of the strongest tests of self employment is the right to substitute a worker who is equally capable of carrying out the work.
Insurance
All self employed workers should hold public liability insurance and preferably professional indemnity insurance
Provision of equipment
Where practical, the worker should supply at least some of the important equipment or tools. Of course, the extent to which equipment is required depends upon the nature of the work.
Workers who invoice for labour and materials are more likely to be viewed as Self-employed."