How does the Revenue decide if my tradesmen should be employees?
HMRC looks at how you work with sub-contractors, and if:
- You use self-employed tradesmen without a written contract,
- You supply the majority of the materials, plant and equipment,
- You pay them an hourly/daily/weekly rate
- The sub-contractor cannot demonstrate that he can make a loss as well as a profit, or
- the sub-contractor cannot demonstrate that he has an active portfolio of other clients,
then HMRC are extremely likely to find that these tradesmen are your employees, that the sub-contractors are not genuinely self-employed, and YOU are liable for any unpaid tax and national insurance contributions, plus penalties.
Watch the short film below to find out how HMRC decide if your tradesmen are in fact employees.