Are you really self-employed?

Danbro, the award-winning specialist accountancy firm for contract and freelance workers, is warning contractors to ensure they do genuinely fit the criteria of being self-employed ahead of a likely government crackdown.

The government is currently consulting on new legislation to tackle ëfalse self-employmentí, following measures announced in this yearís Budget by Chancellor Alistair Darling. Mr Darling claimed that, as well as costing money to the exchequer, false self-employment also affected the ability of compliant businesses to be competitive and stopped workers accessing social security benefits to which they were entitled.

False self-employment occurs where workers are treated as self-employed for tax and National Insurance purposes, even though the way in which they work on a day-to-day basis indicates an ëemployment relationshipí. The consultation outlines the governmentís proposal for ensuring construction workers, who it considers to be working effectively as employees, are taxed appropriately. In its opnion, the best way to achieve this is through legislation.

It is thought the 300,000 or so labour-only subcontractors are the main target of the legislation, but anyone else who HM Revenue and Customs considers to be an employee but is not paying the correct tax – whether due to deliberate subterfuge or a genuine error – is also likely to face a bill for the missing tax and a large fine.

Danbro business development manager Michael Rhodes said: ìWe wouldnít advise anyone to operate through a self employed model who we did not believe was genuinely self-employed. On initial contact with any person enquiring about our service, we go through a working practice review to help us recommend the most tax efficient and compliant option available, pointing out the potential tax liabilities and penalties that may be charge to anyone who gets the self-employment or employed question wrong.î