Employment Costs
The Risks to your Business
An employee only workforce is around 40% more expensive than a mixture of both employed and self-employed sub-contractors.
The costs include holiday pay, pension contributions plus the costly administration of PAYE and the full range of employee rights and associated reporting burdens.
A fixed workforce is less productive, and removes your ability to match your workforce to your orderbook.
The Risks to your Business
What happens if self-employed sub-contractors are reclassified as employees?
If, as the result of either an HMRC Status Inspection or as a consequence of an Employment Tribunal claim you are forced to reclassify your self-employed sub-contractors as employees, you face a number of massive challenges to your business.
The Potential Effects
If your current terms of engagement have been successfully challenged by HMRC, you face bills for unpaid Employers National Insurance contributions, plus penalties and interest on the unpaid taxes. HMRC can also levy fines of up to £3,000 per monthly CIS return, because you incorrectly ticked the self-employed status declaration when your sub-contractors should have been employed.
Even if you could negotiate payment terms with HMRC that allowed you to continue trading, how can you then both persuade well established sub-contractors to take an inevitable cut in pay or prevent them from lodging claims in an employment tribunal for unpaid holiday pay, pension contributions, and (if you have let them go) unlawful dismissal?
Further still, the cost to a business for the future engagement of tradesmen as full-blown employees is at least an additional 40% on top of your current payroll burden.
What is the solution??
By engaging EEBS for the supply of your sub-contract labour, you create an unbreachable firewall that prevents HMRC from reclassifying your self-employed sub-contractors as employees. EEBS have many, many clients who have been inspected by HMRC whilst using our services, and our business model has never been challenged.
Additionally, EEBS will:
- Verify each sub-contractor with HMRC
- Calculate the sub-contractors CIS tax
- Inform the sub-contractor of the amount that they will be paid
- Include all of the engaged sub-contractors on our own status submissions to the Revenue
- Provide the sub-contractor with both a payment statement for each time they are paid, plus an annual CIS deduction statement.
Other benefits of appointing EEBS to engage with sub-contractors on your behalf include protecting your business from Employment Rights claims, i.e. holiday pay, pension contributions, unfair dismissal, discrimination and parental rights plus a massive reduction to your CIS administration. You simply verify us with HMRC, and replace the sub-contractors that you previously reported on your CIS300 with EEBS.
Employment v Self-employment
| Employee | PAYE |
|---|---|
| Basic pay | £40,000.00 |
| Employers | NI £4,360.15 |
| Holiday pay | £4,000.00 |
| Pension | £2,000.00 |
| Cost to YOU | £50,360.15 |
| Net pay to employee | £29,536.00 |
| CIS Self-employed | Sub-contractor |
|---|---|
| EEBS charges | £624.00 |
| Employers | NI £4,360.15 |
| Cost to YOU | £40,624.00 |
| Net pay to subbie after deductions* | £32,802.64 |
“We are confident that we can rely on EEBS to keep us up to date with any changes and ensure we continue to comply.”
Christine Shearing, Kenwood Groundworks
"J&J Windows & Doors Limited have been using EEBS Limited to pay my colleagues and I for over 6 months and I can quite honestly say that the service EEBS provides is superb! It allows me to remain self-employed, they ensure that I'm verified with HMRC, that my CIS tax is calculated correctly and most importantly that my wages are always paid correctly and on time. I would without a doubt recommend EEBS to friends, family, and colleagues."
James Last, J&J Windows & Doors
“I can call on EEBS when required without the worrying of being tied into an agreement.”
Peter James, Pete’s Landscaping
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