The HMRC have announced this week that they are to form a specialist team to look at the organisations using freelance staff to carry out a full time role.
Using freelance workers mean that an organisation does not have to provide the associated benefits of employment i.e. National Living / Minimum Wage, sick pay, pensions, maternity leave and employer national insurance contributions (NICs).
However, companies found to be using freelance workers to carry out a full time role can be in breach of existing laws and could be fined up to 100% of tax owed. The Treasury has reported that they are owed more than £300m in lost national insurance contributions.
At this stage it is unclear as to how widespread this practice is, though it is considered that the creative and technology industries will be most affected. This initiative comes at a time when the HMRC are reviewing the use of ‘umbrella companies’ to pay staff, and other unusual working arrangements that circumvent NICs and other taxes.
Taxi app Uber, Food takeaway organisation Deliveroo and Delivery service Hermes are all currently in the throes of legal cases regarding the status of their workers, who are classed as self-employed. The outcome of these cases will provide guidance to the interpretation of the law.
Many businesses are advertising roles on a self-employed basis and this appeals to both parties for the flexibility. Recently Prime Minister Theresa May announced a review of workers’ rights following concerns that almost half a million Britons could be wrongly classed as self-employed. This review will look at whether the National Living wage is being undermined, and what changes in legislation may need to be implemented as a result.
If you are concerned about the status of any of your workers, employed or contractors, contact Kim or Kerry to discuss on 01925 758702