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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15865
Experience:  International tax
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If you have someone working for you on a SELF EMPLOYED basis,

Customer Question

If you have someone working for you on a SELF EMPLOYED basis, and though you have advised them they should be paying Tax and insurance, you know they are not. Also when you filled in your tax return, you declared they worked for you on a S.A. basis. Are you in any way breaking the law.
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello,
It is a general requirement that those wishing to take on workers consider the terms and conditions of a particular engagement to determine whether the worker is an employee or self-employed. As long as you know that you are declaring the true status of the worker and they are not an employee to you, your obligation is covered.
Work under a contract of service (employment)means the employer will be responsible for operating PAYE and accounting for tax and NICs.
Work under a contract for services (self-employed), means the individual will be responsible for registering as self-employed and for completing a Self Assessment.
You are not breaking the law or going against policy as long as the true nature of the employment is declared.
If you are in any doubt as to the classification of this worker you can use the HMRC tool

http://www.hmrc.gov.uk/calcs/esi.htm

If you have not correctly classified them then yes, you are not being correct.
HMRC advises the following though about evasion:
Tax evasion happens when people deliberately don’t pay the tax they should. Tax evasion is a crime and everyone loses out because of it. HMRC is committed to tackling tax evasion, and much of this work relies on information provided by the public. People who moonlight or do jobs for cash in hand are often avoiding paying tax.
The taxes people try to avoid paying include:
Income Tax
National Insurance contributions
Corporation Tax
Capital Gains Tax
Inheritance Tax
PAYE
Not sure if you wish to report this individual but if you do here is the information:

Tax Evasion Hotline
A confidential phone line for you to report somebody who is not paying their fair share of tax.

This telephone number ONLY deals with tax evasion reporting. It does not deal with questions about taxes, duty or benefits, including tax credits.
Opening hours
8.00 am to 6.00 pm Monday to Friday (If you call before 9.00 am your call may be answered more quickly)
Closed Saturday, Sunday and bank holidays
0800 788 887
Expert:  TaxRobin replied 3 years ago.
JACUSTOMER-sor6t1rv- Last Viewed on 02/06/2014 at 12:28