Marble provides companies with certainty when it comes to subcontracting, and using self-employed contractors
Subbies can be vital for businesses. Subcontracting has some great advantages, such as:
It sounds tempting, doesn’t it?
Well, if a subcontractor is found to work in a similar way as an employee would, all the blood, sweat and tears of establishing and growing a business would be wasted when HMRC take everything from you.
There’s often a lot of confusion about what makes someone self-employed.
Simply hoping you won’t get an enquiry, or that you’ll be able to defend it without an intricate understanding of case law, is a recipe for disaster.
HMRC won’t do you any favours – and you’ll owe them more than you think!
Being forced into moving subcontractors onto PAYE going forwards would cause cost issues for the business which could be unsustainable.
But that’s nothing compared to the pain inflicted by the 6 years of back-dated liabilities that would be due (see below) if you are unable to defend an enquiry.
Don’t put your business at risk!
We’ve got you covered. Keep them self-employed and we’ll look at how your company engages them, provide clear and professional advice about what risk there is to your business, and how to remove that risk completely.
Your business can then focus on what it does best, knowing that employment status is one less thing to be concerned with.
If you’ve got self-employed workers, you risk HMRC (or the workers) challenging their employment status.
For a business, that can mean you’ll have to make huge payouts, and have to pay the workers on a PAYE basis going forward.
In the JL Windows tax case, the company engaged around 20 subcontractors and faced a liability of £500k as a result.
Not only would it give the company a massive debt – it limits its flexibility, and increases costs and administration considerably. It quickly adds up, so it’s worth addressing – before it’s too late.
Most companies don’t actually sit down and work out what liabilities they could be facing if they lose an employment status case.
To give you an idea: for every reclassified subcontractor earning £700 a week, your HMRC liability if you lost a challenge would be around £100 per week for each subcontractor.
It doesn’t sound like a great deal on its own, but bear in mind HMRC can go back as far as 6 years and then it starts to hurt a lot more:
Fortunately, the taxpayer won that case which stopped the owner being personally liable. More recently, Gary Linekaker won his IR35 challenge, but still faced a £400,000 legal bill.
If one of your self-employed subcontractors believes they’re entitled to employment or even “worker” rights, you could find yourself with a court claim (like the much-publicised Pimlico Plumbers case in the Supreme Court).
Holiday pay is just one example of this type of claim and is 12.07% of whatever they have been paid, so the potential holiday pay claim would be £84 per week for a subcontractor earning £700 per week. They can make the claim for as long as they’ve been working for you.
Hopefully, this type of claim wouldn’t happen. But the prospect of a big lump sum payment, and no-win, no-fee lawyers can land you in front of a tribunal judge trying to justify why your subbies are self-employed. It’s a lot harder to argue someone is self-employed when the worker in question is fighting against you and setting out all the ways in which they aren’t.
Holiday pay is just one claim they can make, throw in wrongful dismissal, unlawful dismissal, discrimination, failure to provide a contract of employment and anything else they can think of and it can be a costly affair.
Working with us is simple.
We’ll provide certainty and handle the headache that is employment status.
If you decide that its not right for you, you can simply stop using our services.
Yes in theory, provided you can demonstrate they do not work in a similar way to an employee or a Worker (a separate legal category of worker between an employee and self-employed individual who are entitled to certain employment rights).
Whether someone is an employee, worker or self-employed will depend upon the way in which they provide services. A decision will have to be made based upon the facts of how they work along with case law principles. This is a complicated area but one that can be navigated successfully to ensure you remain on the right side of the law.
Don’t get it wrong!
An employment status challenge is a very painful process. You can end up in a legal dispute that lasts years and is very intrusive to your business where subcontractors and clients are questioned about your business. You will then face liabilities, penalties and interest that will often be so high, it will lead to the liquidation of the business.
If the business survives, it will have the cost of employing the workers on PAYE going forward plus the prospect of the subcontractors putting in a claim that they were in fact employees and entitled to backdated employment rights such as holiday pay since they started working for the company.
So that the risk of using subcontractors is removed.
Why put your business at risk when there is a simple and effective way to protect it? Employment status is a tricky area, so leave it for the experts who can then be responsible for getting it right, and liable if they don’t.
It is perfectly possible to pay subcontractors directly and having good advisers, contracts and processes will help with that. It will not remove the risk however and will always be a dark cloud hanging over the business.