What is the threshold that your tax compliance team use to determine whether someone is self employed, based on the answers given to the following questions?
I am clear that this decision is at the discretion of your tax compliance team.
I would like to request the criteria for being deemed self employed (ie one would continue to pay one’s own tax via self assessment) in relation to ESI checks and information as to why the engager completes this form without having access to correct information.
The criteria for determining whether an individual is ‘self-employed’ or ‘employed’ are set by HMRC and available at www.gov.uk. The Council does not determine whether a contractor is employed or self-employed.
Devon County Council are responsible for determining whether a self-employed contractor, providing services to the Council or its schools, must be paid with tax and National Insurance deducted from their invoice. This is described by HMRC as being ‘treated as employed for tax purposes only’ and does not affect their self-employment status.
The criteria for determining employment status for tax purposes only are laid down in HMRC guidance starting at ESM11000 – Employment Status Manual – HMRC internal manual – GOV.UK (www.gov.uk). The Council also has to take into account status decisions by HM Courts & Tribunals Service (Employment tribunal decisions – GOV.UK (www.gov.uk), which usually take precedence over HMRC guidance.
HMRC provide access to an optional online tool – CEST (Check Employment Status for Tax) at Check employment status for tax – GOV.UK (www.gov.uk) – intended to simplify the process for engagers and contractors; this tool is used by the Council but is not the key determining element in the Council’s process, as we have to consider all the guidance in ESM11000.
The Council officer who engages the contractor is responsible for gathering information about the contract, terms & conditions and submitting this to the tax compliance team. Where a contractor disputes the outcome of the check or feels that the information submitted to tax compliance is incomplete or wrong, there is a formal appeal/review process in place, which is conducted by a more senior person not connected with the original decision. The contractor is advised of the review procedure on receipt of the original decision.