Self Employed Pitfalls (non IT)

[Pondlife]

My friend's partner is starting work as a Dental Hygenist and will be working a 60/40 split between two practises.

One of them is insisting she be self employed and responsible for all her own Tax and NI, she's also being asked to sign a contract indemnifying the practise should she fail to pay the required amount. They are also stating no holiday, sick, maternity pay etc.

I know many contractors go limited purely because the agencies won't deal with self employed because of the tax implication above but in this instance there is no agency.

So

Q1) Would she be better off as a Ltd than Self Emp?
Q2) Can they still do the no holiday, sick, maternity pay these days?


Ta muchly

[pmeswani]

My friend's partner is starting work as a Dental Hygenist and will be working a 60/40 split between two practises.

One of them is insisting she be self employed and responsible for all her own Tax and NI, she's also being asked to sign a contract indemnifying the practise should she fail to pay the required amount. They are also stating no holiday, sick, maternity pay etc.

I know many contractors go limited purely because the agencies won't deal with self employed because of the tax implication above but in this instance there is no agency.

So

Q1) Would she be better off as a Ltd than Self Emp?
Q2) Can they still do the no holiday, sick, maternity pay these days?


Ta muchly

Probably worth going down the Ltd route, but I would be concerned about how IR35 may affect her in this situation. So it may be worth getting both practices to treat her as a freelance consultant.

To Answer your second question.... don't know. I'm guessing that if she goes Limited, she can still pay herself for when she goes on holidays, sick or maternity. She will effectively be her own boss, so can take time off as and when she needs to.

[Not So Wise]

I know many contractors go limited purely because the agencies won't deal with self employed because of the tax implication above but in this instance there is no agency.

Immaterial, the practices would not want a self employed/sole trader for exact same reasons agencies don't, risk of person not paying their tax's and "hiring company" (agency/client/practice) becoming liable for them, Ltd's give them an extra layer of protection from this.

Can they still do the no holiday, sick, maternity pay these days?

These are all for employee's/temporary workers, she will be neither of these for the practices.

Basically her Ltd would have a business to business relationship with the practices and she would be an employee of her company, any contract terms between her personally and the practices should not be accepted (you don't see Richard Branson agreeing to be personally liable if your Virgin Flight is cancelled do you?)

As pmeswani mentioned, there could be IR35 implications, so she will have to look at contract (recommend instead she get her something akin to a standard IT contractor IR35 compliant contract and get them use that instead) and working practices because if she falls under IR35 it could be costing her a huge chunk of income

Have a look for a website dedicated to health care workers/freelancers, they should have more detailed information

[PhilAtBFCA]

Pondlife

I think youre friends partner needs to be careful here, as does the dentist.

It has been common practice to try and engage dental hygenists as self employed, and a limited company is not necessarily of any great use or any better than self employed status.

It does depend on how she is engaged by the practice. Whose clients are they ? Who takes the bookings ? etc.. All standard self employed status stuff which they really should take advice on and do it right.

The engager is the one with most of the responsibility here is the hygenist is self employed. If they get it worng HMRC will be talking to them about the tax and ni that should have been deducted !

Its also Ok to be self employed in one engagement and employed in the other, like IR35 each engagement is a unique contract in itself, but the overall picture is important too !

Phil

[philip@wellwoodhoyle]

I don't know if things have changed in the last few years, but I used to do a lot of hygienists and dentists and self employment was the standard practice. At that time, the employed versus self employed argument wasn't relevant as the hygienists/dentists wouldn't be paid a wage - they'd get a percentage of the fees they generated - usually 40-60% and they'd often also have to pay lab fees themselves out of their share, also no sick pay nor holiday pay nor any "control" over their work as they are professionals. Furthermore, they would have to have their own PI insurance. This method of working appeared to be the norm in those days. Limited company wasn't an option as the dentists professional body didn't allow their members to practice as limited companies (I think they do now) - I don't know if the hygienists body had a similar rule, but never had any hygienists as ltd cos either. I suggest that she contacts her professional body to ask them firstly if she is allowed to be a limited company, and then once she knows that, she can progress to talking to the practices about her employed/self employed/limited status with them.

[Pondlife]

Thanks all.

[centurian]

Q1) Would she be better off as a Ltd than Self Emp?

Financially better off as a Ltd paying minimum salary and dividends. But then you get all the potential IR35 hassle etc.

However, self employed NI is only 8%, rather than the 12.8% + 11% as a PAYE employee.

Also if HMRC do deem them to be a disguised employee, the employer is responsible.

Personally, I'd be quite happy to pay 8% NI and never have to worry about HMRC again.

[saigon triumph]

Slip in a Limited Company

I have had similar problems when dealing with agencies. i found a solution however. I use Mitsu limited. They basically allow me to remain self employed. They get paid from my agency. They take out their fee and pay the rest to me. So i basically sort out my own tax. For some reason agencies have no problem working with Ltd co but they do with individuals. i have no idea why.

Check them out www.mitsulimited.co.uk

Good Luck

[TykeMerc]

I have had similar problems when dealing with agencies. i found a solution however. I use Mitsu limited. They basically allow me to remain self employed. They get paid from my agency. They take out their fee and pay the rest to me. So i basically sort out my own tax. For some reason agencies have no problem working with Ltd co but they do with individuals. i have no idea why.

Check them out www.mitsulimited.co.uk

Good Luck

Surely they're taking a massive risk if their customers fail to pay their tax and NI, I've no idea how they square that one off...

[Hex]

Surely they're taking a massive risk if their customers fail to pay their tax and NI, I've no idea how they square that one off...

My guess would be that they don't intend to be around more than a year or so and so they won't risk this. I would be very careful about using a company who take this sort of risk.

All just my opinion.