Employed v Self Employed
The perennial debate over the status of self employed individuals took a new twist with the recent finding of the Special Commissioners in the case of Demibourne v HM Revenue & Customs.
In the past, where an individual was held to be an employee and HM Revenue & Customs sought PAYE and National Insurance from the employer, some comfort could be had from the fact that the individual had paid income tax and self employed National Insurance (i.e. the Crown had not totally lost out). Consequently, the shortfall was only employer’s National Insurance. These were broadly the facts in the above case.
However, the Special Commissioners held that HM Revenue & Customs could seek PAYE and National Insurance from the employer despite the fact that the individual had paid tax themselves. This is a worrying development in that HM Revenue & Customs can now get the tax and National Insurance twice!
In view of this, even greater care needs to be taken when engaging the services of a self employed individual and, if there is any doubt as to their status, basic rate tax should be deducted at source Contact Alex White at awhite@clbcoopers.co.uk for further information