Should your associate be self-employed?

Should your associate be self-employed?

Traditionally associates, hygienists and more latterly therapists have been considered self- employed, and have enjoyed the benefits, especially the preferential tax savings. This has reduced the financial responsibility for your practice in terms of holiday, maternity, sickness, and more recently pensions etc.

Over the last 15-20 years there has been murmurings and discussions about whether it is justified that associates are paid 50% or has the time come that they should be on a sliding scale starting at 35%?

A better question should be, is my associate self-employed at all?

You know that HMRC does random tax investigations. What would be the impact on your practice if they decided on balance that your associates, therapists, and hygienists were not  self-employed. What would the costs be to the practice in back PAYE, NI etc if they went back 20 years as they are entitled to? (they do generally only go back 6). Would they have grounds to prosecute you, would you be at risk of a custodial sentence? (A custodial sentence is possible although HMRC do generally prefer to take civil action)

On the HMRC website there is a simple check list of questions for you to answer to enable you and your associates, therapist and hygienist to evaluate whether they are employed or self-employed. You can click here

https://www.gov.uk/working-for-yourself/what-counts-as-self-employed

For your ease and convenience, the list is below

You’re probably self-employed if you:

·         run your business for yourself and take responsibility for its success or failure

·         have several customers at the same time

·         can decide how, where and when you do your work

·         can hire other people at your own expense to help you or to do the work for you

·         provide the main items of equipment to do your work

·         are responsible for finishing any unsatisfactory work in your own time

·         charge an agreed fixed price for your work

·         sell goods or services to make a profit

It is for you and your team member to robustly show that they deserve their self employed status.

I do realise that this will be a difficult conversation to have with new and current team members, and it is one you must have.

IF they want to keep their self-employed status what changes need to be made?

If they would prefer to move over to being employed, how big a drop in salary do they need to take to allow you to fund the additional financial responsibilities?

I would love to hear your comments on this thorny issue, let me know your thoughts