CIS Payroll

What does false self-employment mean for my business?


If you are subcontracting services to a contracting company who engages self-employed subcontractors, you need to be certain they are correctly engaging the subcontractors on a self-employed basis, under contracts which allow the subcontractor to work free from day to day supervision, direction or control over how they provide the work.

You also need to be careful to make sure that your own clients (the end users – a groundwork company, for example) do not attempt to supervise, control or direct the self-employed subcontractors as this is now the key test for workers who provide services to end users via third parties.  You may be a third party in this context, which could mean that where there is in fact some control over the worker, you could have unexpected tax and national insurance obligations.  For the avoidance of doubt, working under control is different from, and more excessive than, working to a project specification.  Sense and logic dictates that even the self-employed must work to some kind of specification.

It is in your interest to make sure the relevant company has insurances and contracts in place with you for the provision of services (and not just for providing payroll/payment to the subcontractors).  Where you are satisfied these are in place, the changes should have no impact on you as you are contracting with a genuine commercial contractor (such as Ontime Contracting).


Employment businesses

If you are using a contracting company which engages self-employed subcontractors you must satisfy yourself that the company has correctly engaged the subcontractors as self-employed under terms which confirm the subcontractors are not subject to direction, supervision or control over how the work is done.  These two key points should appear not only in the contract between the contracting company and your company, but also between your company and your own client.  A briefing to your client may also be beneficial as it is not only the contract that matters but also how things actually operate on a day to day basis.

If the client requires a subcontractor to stop work on one part of a site and do some work on a different part of the site instead, that may amount to control or direction and so could be enough to have that subcontractor treated as an employee for tax purposes, with the associated income tax and national insurance costs.

Ideally, contracts should be for specific identifiable projects; if a subcontractor is engaged simply to provide services rather than to fulfil a specific identifiable project, there is a danger that the subcontractor will be considered to be under the control, supervision or direction of the end client because the subcontractor will need to be told what to do on site.  Remember that working under control is different from, and more excessive than, working to a project specification.


To discuss your Self-employment contracting requirements or for helpful advice,  call us on 0113 8267260 or use our online contact form.

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