It would be nice for HMRC if everybody fitted into neat boxes. If every worker was happy to be an employee and every client able and content to offer consistent, steady employment, then their tax and NIC collection would be simple. They wouldn’t be introducing more and more legislation to identify and prevent the false self-employment practices that they believe are losing them millions in revenue.
But people don’t fit into neat boxes. Tasks that need doing don’t schedule themselves into a nice, neat pattern. Demand for skills rises and falls. Ability to work fluctuates around other commitments. Some individuals enjoy routine and direction, working best when they’re closely managed. Others have entrepreneurial spirit or seek the freedom to make their own their choices. That’s the real world.
Employed or a self-employed workforce?
Uber has recently lost a case in the UK employment courts. The case was brought by two drivers on behalf of a group who argued that they were effectively employed and should, therefore, be entitled to the rights of employees.
We’re not here to discuss the merits of the case, the outcome of which is due to be appealed, but it’s a prominent case that highlights the problems of establishing a clear, unambiguous employment status. This is an area that’s coming under a lot of scrutiny. The Government are looking at modern working practices and HMRC is creating a unit to investigate the role of intermediaries such as agencies.
Clients’ risks
The key determiner of employment versus self-employment remains the amount of direction, supervision and control the client has over the worker’s activities. This area will always be subject to argument, but clients who use agency workers, of freelancers, via personal service companies should be very careful with their record keeping. They could find themselves liable to foot the bill for unpaid tax and NIC if HMRC decides that the worker was effectively an employee.
Contractors’ costs
Similarly, workers who don’t want to go to the lengths of forming a company need to be careful of heading down the agency route. Agency fees can be substantial, and some agencies insist on the use of umbrella company arrangements. Take home pay can be drastically reduced as a result, and even under these circumstances, HMRC’s ever-tightening rules might well apply.
Standing up for self-employment
What’s at stake here is the ability of those who genuinely want to be self-employed to maintain that status. Self-employment works for millions of people. They enjoy the flexibility, being their own boss, determining their workload, making their own choices of who to work for.
We believe that being able to choose this path should be a fundamental right just as employees have a right to be protected from unfair employment practices. Choices Driven are passionate about giving the self-employed their freedom of choice. It’s one of the reasons we exist.
To learn more about the Choices Driven franchise model call 01924 802133 or contact us below.
