Hiring self employed contractor

[Limited]

Our 2 fee-earner company is looking to hire the services of a sales person (fee + commission) who will also be providing some consultancy to our clients on an ad-hoc basis (fee to be agreed).

We see the best way of doing this being on a self-employed basis as it will probably be short term and he doesn't have a ltd company.

My only experience of hiring subcontractors is through their own ltds. I know agencies won't deal with self employed, but is there any reason why we cannot?

I guess it needs to be a genuine self-employed situation, but are the questions the same as for hiring a ltd? Eg not sure we want or need a right of substitution in there.

Any help appreciated. My accountant is fairly relaxed about it all but then he usually is.

[RichardCranium]

You could just put the person on the payroll - the easiest solution of all.

The risk is that if they are self employed and do not pay their tax, Hector might come after you for it. Is that likely to occur? How well do you know the individual? Checked their references?

You could ask them to provide evidence to your accountant that they have paid their tax, otherwise you will bill them for NI & PAYE (just put that in the contract).

[Limited]

Fairly confident that he will pay his taxes as self employed.

Main worry is whether he might be viewed as an employee and I guess we would have additional NI to pay.
On most of the IR35 type issues I think he would be viewed as self-employed, but as a sales person or when acting as a consultant, we would want him to appear to be part of our company (eg business cards, email address etc). In a quick look at sample self-employed contracts they appear to stress that the consultant must not make themselves out to be part of the company.

If on the pay-roll then I guess we need to start thinking about all sorts of employment related issues, proper employment contracts, holidays etc.

[TykeMerc]

1. We see the best way of doing this being on a self-employed basis as it will probably be short term and he doesn't have a ltd company.

2. My only experience of hiring subcontractors is through their own ltds. I know agencies won't deal with self employed, but is there any reason why we cannot?

3. I guess it needs to be a genuine self-employed situation, but are the questions the same as for hiring a ltd? Eg not sure we want or need a right of substitution in there.

1. Fine, perfectly reasonable.
2. Nowt to stop you
3. You're taking a small risk over the person not paying their taxes, but you can help that with a sensible contract. You definitely don't want a right of substitution in this persons contract.

[NotAllThere]

When you wrote the contracts for ltdco subcontractors, you applied certain criteria to make sure that they didn't fall under IR35. You only need to apply the same criteria to a self-employed person, and you shouldn't have a problem.

IR35 means - would the person be an employee for the end client if they were contracted direct as a self-employed.

[TheFaQQer]

You might also want to check your own / their insurance policies if you are taking them on as a contractor rather than an employee.

[Limited]

Thanks all for your help

To clarify, the contract with the end client is completely is outside ir35. My concern is his contract with us.

Two issues that worry me are
- we want him to appear to the outside world as part and parcel of our company.
- as TykeMerc said, we don't want a right of subsititution

Surely these issues would be a concern if a ltd co subcontractor so is it different for a self-employed person?

And a long shot, can anyone recommend a standard contract for this sort of thing? I'm guessing this might be outside the usual standard contractor contracts

[ASB]

Thanks all for your help

To clarify, the contract with the end client is completely is outside ir35. My concern is his contract with us.

Two issues that worry me are
- we want him to appear to the outside world as part and parcel of our company.
- as TykeMerc said, we don't want a right of subsititution

Surely these issues would be a concern if a ltd co subcontractor so is it different for a self-employed person?

And a long shot, can anyone recommend a standard contract for this sort of thing? I'm guessing this might be outside the usual standard contractor contracts

If you actually WANT him to appear as part and parcel do not even think about employing them as SE. Read IR56. When you lose the status enquiry - which you will if you described the above - then the payments to him will be treated as NET employment income, i.e. this will be back calculated including NI, ER NI and PAYE into a gross payment. You will then have to hand that over + Penalties.

[Limited]

Thanks

So what you're saying is that as soon as we want customers to think that he will be part of our company (even though he is actually acting as a consultant), then the relationship can't be one of self-employed?

Any ideas of where I can go to get some more help with this? Would the usual IR35 specialists deal with this sort of question?

[ASB]

Thanks

So what you're saying is that as soon as we want customers to think that he will be part of our company (even though he is actually acting as a consultant), then the relationship can't be one of self-employed?

Any ideas of where I can go to get some more help with this? Would the usual IR35 specialists deal with this sort of question?

I am not saying it can't be one of self employment, just (very) unlikely that it will be. The guide I mentioned can easily be found on HMRC web site, it really is a good starting point. IR35 is irrelevant effectively in the scenario you describe. Either he is your actual employee or he is self employed.