I am a self employed sole trader who works in garden landscaping and work on my own I recently was asked by a friend if I had any work available as he had just finished working on site as a self employed labourer. He is hard working and trust worthy and with plenty of work on I am seriously thinking of offering him work for the mid term at least, now not being down this road before I thought I could hire him as a self employed labourer full time and pay him weekly as the work dictates, I could not guarentee him full time work all year and this can be seasonal and I have had to do short weeks in some winters but I could offer full time for a good few months at least and coming into spring things pick up so this could roll through the year anyway I have been reading that he may not be recognised as self employed if he works through me for to long and will infact be an employee which I have no idea what implications this brings to me so therefore....
Q1 where do I stand on the employment status and what are the pros and cons for each scenario especially as an employee.
Q2 Do I need insurance for either of these scenarios
Finally completely in a different direction and therefore will give this a fresh post aswell I have been working from a car and trailor but I am looking to buy a second hand van for around £3000 especially if I take on my friend and maybe push more work I have worked like this since I started up and therefore is my first van purchased solely for work so
Q1 Can this be put completely against my taxable profit.
It may be bought from my personel saving and repaid when theres enougt money built up in the business account or wait to the business acount has built up enough surplus the put a deposit down and finance the rest through a loan
Q2 what would be my best options what effect would this have with my tax assessments.
If you take on your friend as a self employed labourer full time I think HMRC will see him as your employee even if the work is seasonal. You will also need employers’ liability insurance as soon as you become an employer. There is also contractors insurance when hiring sub-contractors. You will need to consider if your business can afford to take on an employee and should do all the sums and consider all the costs in this regard; e.g. workplace pensions coming soon. An accountant could help you with this.
If you decide to hire your friend as an employee, you should contact ACAS acas.org.uk. Call their Helpline on 08457 47 47 47 beforehand and they will offer you full support, including training, to ensure you and your business is compliant with employment law. You will need to tell HMRC once you are an employee and it's probably easier for you to contact a payroll provider who can also act as your PAYE agent and liaise with HMRC on your behalf.
I hope this helps.
Sorry, missed your second question. If the van is exclusively for business use it will be an asset owned by your business and repair, insurance, fuel costs etc can be claimed but there are some rules in this regard and again, you should contact a tax accountant with this and also to advise on part-financing of the purchase via a loan.
Thanks for the response Robert,
This is what is my biggest stumbling block is with the situation, I am not sure it is my best interests financally or otherwise to have an employee, my business and situation is best aimed at using self employed workers, my friend has been a self employed ground worker for at least 2 years on site and paid his own NI and TAX,based the advice you gave me and looking at as much advice from other sites including HMRCs exhaustive pages I intend to draw up a contract for services based around self-employed principles such as:-
Agree to do job for a fixed price regardless of how long the job may take and with all financial risk this entails met by the S/E worker.
S/E worker has right of subtitution and/or engage helpers at his own expense.
Supply there own tools and/or hire equipment at their own expense.
S/E worker has right to work to their own time schedule and to their prefered process of work to a satisfactory standard.
The S/E worker will have to correct all unsatisfactory work in their own time and at their own expense.
I will not promise him permanant full time work and except he can/will source his work from anyone, the fixed price work will be for the ground work he is experienced in and will not constitute the whole job, while he has no offer of work from other sources there is the possibility of several jobs he could price me for but on the understanding when the groundwork is done his employment of services will cease and there may be no guarentee of continuous work to follow.
On these grounds and with the right contract of services written up before any offer of work can he maintain his status as self employed ground worker which he has been registered as for the last 2 years, is there anything I can draw up to add to this to justify offering him work on a self employed worker basis.
Also I have been looking at the possibility of the C I S scheme, what advantage if any would this offer and what advice would you offer on this.
Once again thanks for the advice.
Before going ahead with a legal contract, you still should give ACAS a call and contact an employment lawyer, to ensure what you are doing brings the intended outcome. Some trade bodies, FSB etc offer free legal advice - try also posting in the legal discussion forum on Freeindex.
Generally lanscaping is not covered by the CIS scheme https://www.gov.uk/what-is-the-construction-industry-scheme/work-covered-by-cis
what you put for the S/E test is quite right. As long as they pass these requirement they could be classified as S/E. You are always providing job for him, so he does not need to do his marketing to get the job. It could be the grey area when HMRC justify his status.