The story goes something like this:
My client wanted me to take on abit more work, so asked me to provide a second person to take care of some mikey mouse tasks, just for a very short period of time. So i went and grabbed a fresh grad from my uni and employed him for 2 weeks.
Our agreed rate was 12 pounds per hour, 40 hours a week, but stuipd old me forgot to say, this is before tax/ni... But this person in some way is my friend, so I don't want to burn any bridges; plus he may be useful in future days now client is happy with his work. So i don't want to just play hardball and p him off. (plus the PAYE/NI should be quite low, my company can absorb the hit)
He never worked a day in his life, so i thought the maths will be quite straight forward. £480 for March, pay in one lump, then pay him again in at the end of this month another 480. (he worked last week in March, first week in April, yes, couldn't have timed it worse). then let the accountant do the backward calculations and I will just make the PAYE/NI payment when the numbers come out.
But now my accountant tells me the maths is not so simple because all the tax code and stuff and i have to instruct them how much i want to pay this person (net amount).
So few questions here:
1, am i already in the brown stuff? Since my accountant made no mention of me doing this the wrong way when i made the march payment. (I made the payment on last day of march, and he has been holding the money for quite sometime and it passed the last day of last tax year)
2, Am I better off just ask this person to pay my company back and say £12 per hour inc tax then let accountant do the maths, and once all went through i just pay the difference out of my own pocket?
Thanks in advance
My client wanted me to take on abit more work, so asked me to provide a second person to take care of some mikey mouse tasks, just for a very short period of time. So i went and grabbed a fresh grad from my uni and employed him for 2 weeks.
Our agreed rate was 12 pounds per hour, 40 hours a week, but stuipd old me forgot to say, this is before tax/ni... But this person in some way is my friend, so I don't want to burn any bridges; plus he may be useful in future days now client is happy with his work. So i don't want to just play hardball and p him off. (plus the PAYE/NI should be quite low, my company can absorb the hit)
He never worked a day in his life, so i thought the maths will be quite straight forward. £480 for March, pay in one lump, then pay him again in at the end of this month another 480. (he worked last week in March, first week in April, yes, couldn't have timed it worse). then let the accountant do the backward calculations and I will just make the PAYE/NI payment when the numbers come out.
But now my accountant tells me the maths is not so simple because all the tax code and stuff and i have to instruct them how much i want to pay this person (net amount).
So few questions here:
1, am i already in the brown stuff? Since my accountant made no mention of me doing this the wrong way when i made the march payment. (I made the payment on last day of march, and he has been holding the money for quite sometime and it passed the last day of last tax year)
2, Am I better off just ask this person to pay my company back and say £12 per hour inc tax then let accountant do the maths, and once all went through i just pay the difference out of my own pocket?
Thanks in advance
now he just wants to know how much do I want to pay this fresh grad in net terms. 
You should be ok in these circumstances as long as you issue a P45 to your friend so that the initial earnings in April will be recorded in his income if he works again during this financial year - his earnings for April (and March come to that) fall below tax/NI thresholds so there will be nothing owing to HMR&C to date.
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