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There are quite a number of rules and regulations regarding “Independent” or Self Employed workers.  

A distinction is drawn between a Contract of Service (Employment) and a Contract of Services (Self Employment or Independent Contractor).  For a Contract of Services to exist the Company sets the task to be performed and it is for the Contractor to determine how the task is performed.  

Each task stands on its own and there is no expectation that the Contract will be renewed at the end of the task.  It is essential that the risk remains with the Independent Contractor. Where there is a Contract of Service then the Company would have the responsibility of providing further work as well as taking on the relevant employment rights regarding holiday pay, sickness etc.

The earnings of a person who is working as an independent contractor will be subject to Self-Employment Tax which they will be responsible for administering.

If an employer-employee relationship exists (regardless of what the relationship is called), they are not an independent contractor.

An individual would probably be self-employed where they:

  • run their business for themselves and take responsibility for its success or failure
  • have several customers at the same time
  • can decide how, where and when they do their work
  • can hire other people at their expense to help them to do the work for the company
  • provide the main items of equipment to do their work
  • are responsible for finishing any unsatisfactory work in their own time
  • charge an agreed fixed price for the work
  • sell goods or services to make a profit (including through websites or apps)

It is important that the above criteria are met in order to establish the Employment / Self employment position.  Each element of the situation needs to be examined carefully in deciding the correct treatment.  The ultimate responsibility for the decision remains with the Company.  There can be significant penalties where HM Revenue & Customs determines that a different conclusion should have been reached.

If you would like any advice on this matter please do not hesitiate to give me a call at our Bridgwater office.