Self Employed Tax Advisors

Employed or Self Employed? The question as to whether someone is employed or self employed is not as straightforward as it might at first appear. Many people assume they are free to choose, but HM Revenue & Customs emphasises that this is not the case. How do you decide? Although there is no clear-cut answer to this question, HM Revenue & Customs has published a leaflet (IR56 Employed or Self Employed?), which sets out a series of questions to test the particular circumstances of any working relationship. These cover areas such as: - Ultimate control of the work - Profit element, and risk of loss - Provision of materials and equipment - Integration with the employer’s business - The intention between the parties - Usual conditions in the industry Note, however, these are matters of general employment law, and not specific tax legislation. In addition to the above pamphlet, HMRC has released a subsequent factsheet – ES/FS1 Employed or self employed for tax and National Insurance contributions – which provides updated advice for employees in view of the new construction industry scheme as well as managed service companies. This latest guidance also reiterates that the responsibility for making sure it is correct remains firmly with the employer. While it replaces part of the IR56 publication, employers have been advised to refer to the original IR56 until further information is released.

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