If a business hires or sub-contracts out workers self-employed contract workers, those businesses are responsible to verifying if these workers have the right to work in the UK and are genuinely self-employed. Failing to carry out these checks could mean your business receiving civil penalties and even custodial sentences if found guilty. Just to say these workers are self-employed, will not wash with HMRC as they will state that you or a third party company is potentially avoiding paying Employer's National Insurance contributions (ENIC).
For someone to be genuinely self-employed, each self-employed worker will need to be seen to be taking all the risks whether you hire the contract worker directly or sub-contracting them out. They should also been seen to be their own boss and have a right of substitute set up in case they cannot do the job on hand.
HMRC has a number of ways to verify if a contract worker is genuinely self-employed. If HMRC deems any self-employed individual not to be genuinely self-employed, then you or a third party company who are paying their invoices is likely to be investigated by HMRC under potential tax evasion. IR35 is like a minefield however, simple mistakes of which you may not be aware which you might document down or have contracts in place, is all the evidence HMRC needs to proceed with an investigation, which could lead to fines and back-date unpaid taxes being claimed for.
If for example you have hired or subcontracted out self-employed workers, it means no ENIC has been paid to HMRC as these workers are claiming to be self-employed. If HMRC has evidence to suggest that these self-employed workers should be employed under PAYE, then HMRC are likely to take legal action and claim back-date that is owed and they could go back a number of years and this could cripple overnight a business.
If you decide to want the peace of mind, ‘take the free IR35 test now’ and we help you where we can at no cost to your business.
This test has a number of questions; it is not targeted at any specific industry. This test goes much deeper than the standard test that you find on HMRC website when you try to verify a self-employed worker. Our test is about protecting your business and helping you put in place ‘Good HR Practices’. If you are a member of the Security Industry Authority (SIA), they call being compliant as Fit & Proper.
When you take the test, our software will grade your answer as Green, Amber or Red. This will inform you whether your business is at risk. If you have a number of red lights then you have potential IR35 issues to resolve, if Amber then these will need to be investigated to see if they should be red or should be green. Once you completed the IR35 test; if requested by you, we can consult you on the key issues you should cover if HMRC carried out an investigation. If you do nothing, do not get clarity, your business could be at risk. You can use our test results and contact any other legal advisor to help you become compliant or, contact AVERT for free advice.
If you are not 100% sure if you are compliant or not, register now and take the AVERT IR35 test, it is 100% Free, No catches, all data is strictly confidential and will not be distributed to any third party directly or indirectly and if by some chance your business is not compliant as it could be, we can give you some free tools to help you be compliant.