Home > Legal Articles > If the worker is an employee, you should operate PAYE and deduct and account for tax and NICs.

If the worker is an employee, you should operate PAYE and deduct and account for tax and NICs.

Posted on Wednesday, 22nd October 2014 by
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If the worker is an employee, you should operate PAYE and deduct and account for tax and NICs. If the worker is self-employed, they should invoice for their services and will be responsible for their own tax and NICs.

It is for you (as potential employer) to determine the employment status of the worker. There are some very limited exceptions where employees rather than employers operate PAYE (for example, if the employer is not resident in the UK), but these are rare.

If the worker provides their services through a personal service company, that is, your client contracts with the company, then you will not be responsible for PAYE tax and NICs.

However, in these circumstances, the agency legislation or the intermediaries legislation – the managed service company or IR35 rules – may apply, and the worker will be responsible for deducting and accounting for tax and NICs trhough that regime. In defined circumstances, an end-client can be pursued for the unpaid PAYE and NICs of a managed service company, but only where the end client has facilitated the use of such a company and certain other conditions are met. If you have not been party to the structuring of the personal service company, then so long as you do not have a direct employment relationship with the worker you can pay without accounting for PAYE and NIC.

 

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Leanne Hathaway - Tax and Trusts
Leanne Hathaway - Tax and Trusts
leanne.h@ehlsolicitors.co.uk 01455 274 170
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