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Contractor or paye??

Pros and cons to having help from someone who is self employed to someone on the books? What's the best way to organise paye? Has anyone had issues with hmrc with this matter? Thoughts please?

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  • If you you take someone on and you are their main employer, they need to be on PAYE. Get it right, don't mess with the HMRC, if they were to come to you after say 4 years and reckon the guy should have been on the books, you will be liable for 4 years employers NI.

  • Cheers Colin. I thought as much. I have no idea how to sort paye? Do I hold onto his liabilities and settle up every month or every year to the tax man?
  • This is such a protracted debate, with so many different approaches you can take to it, that I'm a bit reluctant to get involved at all.

    Subcontractor sends you an invoice which, on the face of it, makes admin easier. But as this industry is classified for SIC purposes under construction there is extra paperwork for using subcontractors. There are very strong pros and equally strong cons for both subcontracting your work and for employing directly.

    My main motivator after all of the arguments is outside of all that. If you are a good manager you can offer every incentive by training and example for them to go and start up their own company should they so wish. Then by good management and incentives you can keep them with you. There is nothing better than a happy, highly skilled and motivated employee to enhance the reputation of your business. The enhancement to your reputation when you keep up those high standards and a couple of your ex-staff run good businesses too, well, what a ringing double endorsement. Can it get any better?

    But that is me. I can fully understand why lots prefer employing and I can equally understand why probably just as many prefer subconractors. Sorry, Chris, there just is not a simple answer to suit all on this one.


    Added, now I've seen Colin's post: Yes, make absolutely sure subbies do genuinely already run their own shows. If you take them on full time HMRC will tell you that's ended and you owe the NICs anyway. They've produced a ton of info about employing people and PAYE. You can register for PAYE online, which is probably best if you are not employing anybody yet. If their first week's wage is due you can do it by phone and get your number immediately. Visit the HMRC site and it's all on there.
  • Ok thanks very much
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