It seems to me that taking on a subcontractor for a very small business such as mine and them still not being considered "employed" by the authorities is a bit of a dangerous game, but all the small businesses I come across seem to be doing it. And that is taking on lads as assistants and calling them "subbies"and paying them by the hour and teaching them the tricks of the trade as you go. Which of course puts you in a precarious position as far as HSE and HMRC. Then of course you have the righteous do gooders that say well you should employ people which is fine if you have a turn over of 80 k a year or even 60k but mine is way lower than that and is not physically or practically feasible. So finding I need someone I can only afford to pay say £12 per hour (when you are not supposed to pay subbies by the hour) and getting them to sign a contract for each job when the job might only be worth say a grand plus I would want to work with them on it ,especially in the beginning when I don't know the breadth of there skills, leaves me in a quandary , do I just hope for the best and keep my fingers crossed? I would be interested on other people views on this.
I used to employ some freelancers who invoiced me direct. I got investigated by the HMRC who found that they had declared and paid tax on the money I had paid them. HMRC told me that sash window restoration came under the Construction Industry Scheme and if I took on freelancers I would have to phone them every week and give them the names of every worker and they would tell me how much tax to deduct at source. The work involved in employing workers was more than the money I made so I closed down the business. I think this is called "Helping small businesses!"
Yes, this country is about big business, the little guys hands are so tied up in needless paperwork and stupid EU rules that it not worth the hassle trying to do it right, little wonder so many cash in hand European friends are in the building game. ????
There are ways round it, I take on subbies occasionally, 3 months or so at a time, I have one lad who I have worked with for over ten years, its never been a problem, he is cis registered and does his own tax, if it ever got flagged I would pay him cash every other invoice or pay his wife, it a load of old nut sacks if you ask me. As for the liability, either get them to take out their own or pay for it
They only investigated because I'd put it on my tax return. If I'd paid cash in hand the HMRC would have had no tax paid, which is what they ended up with because I stopped employing people, a bit pointless really.
The guys I used were scenic carpenters and painters who did it in and around their normal work so weren't registered for CIS. For scenic work it depends on your grade and whether you're working in theatre, telly or film how your tax is worked out.
They sure make it hard work to try and make a living, if you want to keep it small and uncomplicated.
Many thanks for the comments so far, what I am really concerned about is minimizing my liability in the unlikely event of an accident.(Obviously I have public liability cover and always work through the CIS ) Lets say my subbie decides to be Tarzan and jumps off a 3m high scaffold tower and breaks his neck. His relatives might be slightly peeved and would immediately try to sue me , the best way would be to say actually I was employing him because:- A) I was working with him and he was using some of my tools. B) I was paying him by the hour and not by the job. C) The only couple of other jobs he had done for anyone else was for his granny in the last 3 months. So therefore I would be liable, because I had employed him (in there legal eyes) and I hadn't put him on a 10 week course to tell him how to stand on a scaffold tower!
Unfortunately, even if he was self-employed working on your site, you would possibly still be liable for his stupidity if he did that.
If you don't have the clout for this don't do it. It might take years to sort out any kind of problems that arise. And you already sound like a willing fall guy................. My answer to any request outside of what i do is : I don't do that you will need to find someone to do it. the secret is to be able to say NO.
Oh I have the clout for it as I have been using subbies occasionally for quite a few years now, but not in the last year, so before I start again I am just trying to find out other peoples opinions and any new ideas on minimising liability, as there is a large grey area for the construction industry around it. Also I am thinking that because of my shoulder problems there may come a time where I have to farm out a lot more of my work, and transition into managing jobs, But it is managing the transition from using subbies to employing people that I as yet cannot see a clear path. Anyone else in this position or has actually crossed over?
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