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Subbing work question

Jake

Well-known member
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3,438
When subbing work, do you have to pay taxes for the sub workers? What's the law on it all?

 
Normally you would just invoice the firm you sub for like any other customer. I don't know many firms that would deduct the tax at source for your or pay your stamp for you so it's up to your to sort that out yourself.

 
You would just pay the sub contractor the rate you agreed on and keep his invoice for your records the rest is up to him

 
You would just pay the sub contractor the rate you agreed on and keep his invoice for your records the rest is up to him
Sounds like a better idea than employing then?

 
Yep but you have to be carefull

If you are a windie giving window cleaning work to someone you have to be able to show they are a seperate company subcontracting some work rather than a permanent part time employee of yours

So they would have to be already registered as a self employed window cleaning company

 
Yep but you have to be carefullIf you are a windie giving window cleaning work to someone you have to be able to show they are a seperate company subcontracting some work rather than a permanent part time employee of yours

So they would have to be already registered as a self employed window cleaning company
I see, thanks Dave

 
If for example they were just working for you 2 days a week it is a case of showing that you are so busy you are passing on work to this other company for a price rather than getting someone to work for you

Not hard really but always good to cover your own **** or you'll be liable for employee's insurance etc

That's why last time i did that for a company i took as much work as i wanted daily and gave him 20% of the value once done

He had other employees working hourly rate so could justify me as a subby covering work his company was too busy for due to sick/holidays etc even though i worked for him 5 days a week

I also did some of my own customers and was registered with hmrc as a company in my own right

 
as a 1 off you will be ok, but if you sub regularly as in every week you be better employing . the reason for that is that most folk cant organize paying their own taxes or national insurance . this can build up and come back to bite You when the hmrc start to probe what this person is doing cos theres no trace of them paying out anywhere

 
It can't bite you boarcity if you insist on invoices to pay them

No invoice no pay

Then you have covered yourself with hmrc and are not liable for anything

 
dont be so sure davey. i know that if the person you are giving the invoices to gets investigated for non payment of tax or NI and it turns out you are pretty much the main employer they come back onto you for it cos you were trying to get round the system of employing and insuring on the books . thats another thing, whoever is subbing from you must carry their own insurance if they are subbing cos your own insurance wont cover them .

years ago i knew a guy who employed his own son as a subbie. course the son kept no records and didnt bother with NI ,cos dad just gave him cash AND SCRATCHED A RECEIPT . when the non payment of NI built up some,hmrc got in touch and there was a sh/tstorm that followed. If only hed paid his NI which is so cheap he might not have paid much tax as he was parttimer but without proper records the dad ended up gettin clobbered for both tax and ni big time

 
If you sub, then they need to be self employed.

You are self employed if you.....

  • have the final say in how your business is run
  • risk your own money in the business
  • are responsible for the losses as well as profits of your business
  • provide the main items of equipment you need to do your job
  • could send a substitute or are free to hire other people on your own terms to do the work you have taken on and pay them at your own expense
  • are responsible for correcting unsatisfactory work in your own time and at your own expense
  • have the ability to work for others at the same time as providing services for a particular employer

That's pretty much how hmrc see it.

 
Yep but you have to be carefullIf you are a windie giving window cleaning work to someone you have to be able to show they are a seperate company subcontracting some work rather than a permanent part time employee of yours

So they would have to be already registered as a self employed window cleaning company
To add to what @daveyboy1, @boarcity and some of the others are saying, you need to be really careful with this.

HMRC are really clamping down on this at the moment, and there can be some grey areas.

If you're subbing work out on a labour-only basis (i.e. an individual is simply helping you, working under your company name, under your instruction, with your materials etc) then you will need employers' liability by law.

If, however, you're subbing out on a bonafide basis (i.e. you pay an external company to complete the job, they work under their own company name, send any given employee of theirs on the day, work under their own instruction, with their own tools etc) then you won't need employers' liability, as they should already be covered by the company they work for.

A good way of gauging whether you're using labour-only or bonafide is by using this question: if they didn't turn up for the day, whose responsibility would it be to find a replacement?




If the answer is you (i.e. they couldn't make it so you had to ring around for someone else) it is likely they're labour-only. If the responsibility lies with the contractor (i.e. they couldn't make it but had to supply someone on that day regardless) it is likely to be a bonafide.

It's really worth being diligent with this as HMRC can charge some crazy fines (up to £2.5k per day, per 'employee') if you're not found to have it all correct.

Hope that helps /emoticons/smile.png

 

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