Self employed or NOT

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  • #38769
    Junep
    Participant

    Dear all

    I have a claimant who states he is an employed earner in accordance with primary legislation and therefore as the administrators of secondary benefits, the claimant states we have to adhere to this and only take his income for the number of days payable less his class one national insurance contributions. However, for the purposes of income tax the claimant states that his ‘expenses’ are allowable through his self-employment status, as deductible.

    I believe that based on the evidence in front of me that this claimant is self employed, as I dont see how you can be both for the same ’employment’.

    As always, looking for inspiration as to what more I should be taking into consideration. I have read the definitions of employed and self employed earners in the primary legislation along with primary legislation case law, when dealing with awards of income support.

    Any help, advice or comments gratefully received as always.
    kind regards
    June
    :~

    #109554
    Kay_Tade
    Participant

    I think, regardless of what the claimant might think in this case and/or HMRC as the case may be, the usual applies for tax/Nics deductions and the definition of “self-employed” or “worker”.

    The questions I pose myself, or rather the claimant, in order to decide one way or another are:

    Do you have to take on the work personally, rather than sending a substitute or sub-contracting the work?

    Does your work provider have a significant degree of control, or right of control, over you?

    Are you paid a regular salary?

    Does your employer or work provider deducts tax and National Insurance (rather than you being responsible for making these payments)?

    Do you receive holiday pay, sick pay, maternity pay etc?

    Do you work at your employer’s premises and use your employer’s tools and/or facilities?

    Are you integrated into the business (for example, if you appear in the company organisational chart, are subject to the company’s disciplinary and grievance procedures)?

    Do you have any financial risk or reward, for example bonuses depending on how quickly or well the work is performed?

    Do you work exclusively for one business rather than performing work for a number of ‘customers’?

    Do you have an employment contract or any other contractual documentation, eg a letter of appointment, which describes you as an employee (also know as a statement of mutual intention)?

    etc etc

    #109555
    Junep
    Participant

    The spanner in the works with this one is that my claimant is a stuntman; who I must state has worked on some noteable tv programmes and films for anything from one day to a number of weeks. The claimant states that Equity solicitors have advised him that he is an employed earner and that he works under a contract of service not a contract for services. I have requested the aforementioned as evidence along with answers to most of the above questions; I just wanted to be sure that I was not missing the obvious or a relevant piece of case law that I could refer too.

    Thanks for the reply

    kind regards
    June
    🙂

    #110879
    Junep
    Participant

    Leading on from the above enquiry, I wanted to ask for opinions relating to the Seven-Day Rule that only applies to the calculation of income tax within the Film, Production and TV Broadcasting Industry to prevent excessive deductions of tax and which is still considered as a requirement for class 1 deductions.

    In respect of this particular claimant, he states that he is for the purpose of HB/CTB entitlement an employed earner but for tax purpose he is self-employed, as he submits any expenses wholly and inclusively incurred, to HMRC through his self-assessment.

    Utterly confused, as we have treated this claimant as self-employed because of all the expenses submitted and of the pertinent questions that I have asked; I would still consider him to be self-employed. Yet the class 1 NICs seems to be throwing a spanner in the works plus claimant is quoting Tax Commissioners case law set in 1993 – McCowen and West.

    At the moment, I have decided to ask him for all of his ‘Contracts of/for Service’ during the relevant period in question, as he states he works on Equity contracts which incorporate collective agreements agreed between his union and the employer.

    Final question, the claimant does have a company, not a limited company, of which he states he is director (suggesting employed earner status) through which it appears he arranges and obtains all offers of employment. Would this strengthen his case as an employed earner?

    Thanks for any responses, comments, or advice.

    Kind regards
    June

    🙂

    #112506
    Junep
    Participant

    Dear all

    Still with this particular enquiry has anyone had dealings with the The Social Security (Categorisation of Earners) (Amendment) Regulation 2003 relating to NICs for performers. I have followed the advice kindly provided on this thread and I must confess I feel absolutely :tired: . I have read legislation galore, guidance from Equity, guidance from HM Revenue and Customs only to be no further forward with my decision.

    I have applied what I would consider relevant tests to decide if a claimant is self-employed or an earned employer and I am totally confused and :~ . Legislation appears to state a claimant can be self-employed for tax purpose, i.e. re-claiming expenses wholly and reasonable incurred through self-employment but also an employed earner for NICs class 1 contributions in respect of the same employment. Falling back on the terminology used, i.e contract of service OR contract for service, I always understood the ‘for service’ meant self-employment and ‘of service’ employed earner but it appears that all contracts issued through Equity are Contracts of Service. Yet I still can’t get my head round the fact that the claimant is able to offset expenditure against his tax and how would I take account of this fact if I considered the claimant to be an employed earner. I surely can’t alter any figures relating to income and expenditure without caculating a self-employed period.

    Probably the most daftest of questions I will ask today but if there was a hierarchy; would Income Tax come above that of National Insurance contributions or vice-a-versa.

    Any feedback would be appreciated but understand if anyone feels as frazzled as I do once they have read my ponderings.

    Kind regards
    June
    :tired:

    🙁

    #112613
    Andi M
    Participant

    Personally i agree with Kay on this one. THe various things the customer is throwing at you are a bit of red herring.
    What you are trying to do here is initially to establish how you are going to treat the customers earnings, i.e. are they employed or self employed earnings. The comment “is an employed earner in accordance with primary legislation and therefore as the administrators of secondary benefits, the claimant states we have to adhere to this” is an interesting one, except the definition of employed earner or self employed for the purposes of housing/council tax benefit comes from primary legislation as the definition in the HB/CTB regs refers us to the definition in th SSBCA.

    So what i would do at the first stage is put all the stuff about the tax and ni on one side and see which of the definitions applies to this customer.

    If you decide he is an employed earner then we will deduct the tax and national insurance that the customer ‘has’ to pay regardless of how those figures were established.
    If you decide that he is self-employed then we will deduct ‘notional amounts’ as set out in the regulations regardless of how much he is actually paying.

    This might seem like an over-simplification in what appears to be a complex case, but it is the way i think i would go.

    #112618
    Junep
    Participant

    Thanks Andi for your advice. I have bit the bullet with this one and shamefully, I will admit read more primary legislation than I knew existed; it was an insight into a complex area that I may have thought previously was more simpler than it was. After twenty years in benefits, I am never surprised that I am still learning.

    I have therefore decided to go with the list I drafted of why I believed the claimant was and is a self-employed earner. I believe at the end of the day regardless of the contracts he enters into; he is first and foremost a person who is in business for himself. No doubt I will be heading to Tribunal on this matter.

    Again, many thanks for the comments
    Kind regards
    June
    🙂

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