Nick Pilgrim, Managing Director of EEBS, leading payroll specialist for the construction industry, looks at the options for contractors to square the circle of needing to maintain a competitive, yet fully compliant, workforce.
It doesn’t matter if you are a business that employs just one tradesman, or if you employ 101, but the flexibility to engage a skilled, reliable workforce, that allows you to match staff to workload, would probably be near the top of the wish list of most contractors.
Many people will, however, tell you that the only way to satisfy HMRC with regard to their employment status is to fully employ all of your staff – ‘on the cards’.
So how do you handle these seemingly mutually exclusive requirements? Traditionally people had to choose between one of the following three options:
Option 1: Fully employed workforce
You can fully employ all of your tradesmen and you hopefully end up with a skilled, reliable workforce. The downsides are:
- payroll costs make this 28 to 42 per cent more expensive than engaging self-employed tradesmen
- you become subject to huge rafts of employment and workers’ rights legislation, and
- you lose the flexibility to match workforce with workload.
Option 2: Directly engage some or all of your tradesmen on a self-employed basis
But choosing this option runs the risk of:
- HMRC reclassifying the engagement as employment with potentially massive liabilities to back tax and fines, or
- disgruntled tradesmen claiming holiday pay once an engagement has ended.
You have the flexibility to hire and fire but at the risk of your status determinations being attacked.
Option 3: Use Agency, umbrella or offshore solutions
Agencies are not cheap. Offshore companies, Umbrella models, managed service companies, etc – have largely been legislated out of existence and those that remain are under intense scrutiny from the authorities.
Also since the advent of the Onshore and Offshore Intermediaries Acts, all these choices put you at risk of a “transfer of debt” should any supplier intermediary fail to apply, or pay over, PAYE correctly.
So what is the secret? How can you get all the benefits with none of the costs or risks? The Solution is to outsource the supply of self-employed sub-contractors to a specialist supplier.
Provided you take advice from a reputable, audited and compliant supplier you can still secure the contractual arrangement you require.
A specialist CIS Payroller is able to keep abreast of legislative changes, to reduce your workload, save you money, and to hold you harmless from challenge – both from the HMRC and in an Employment Tribunal.
Beware, however – all providers are not equal, and you should perhaps choose one who has never had their model challenged by HMRC, who are audited by the Aspire Partnership, (the UK’s leading Construction Tax Specialists) and whose compliance is backed by a comprehensive guarantee!
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