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 tradespeople 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.