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Bringing in crew vs tax and insurance etc


Triode
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I've been getting work with my own small PA rig (4k to 9k) for the last few years.  Now I'm thinking of getting a bit more gear and starting to bring in crew at times.  The thing that is swinging it that way is some jobs are coming in batches of regular gigs that overlap with other events and I can't do it all on my own anymore. Plus it would be nice to have occasional crew to fall back on in case of illness etc.

I'm wondering if those familiar with this aspect of the business can shed some light on the legal aspects of bringing in occasional crew.  Tax, insurance etc.

I come from a musician background and still work as a musician so my insurance covers me personally for both playing and PA gigs. I'm self employed as a sole trader.  

Can I pay freelancers who have their own liability insurance to man one of my rigs without having to go down a route of being a full blown employer with all the tax implications etc?  This will only be an occasional thing.

Is there anything else I haven't thought of that needs sorting out?

Many thanks

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As a production/site manager I rarely employed casuals but I always held employer's liability insurance because in telling contractors how to work, where to run cables etc I was in place of an employer. I guess you would be in the same boat with S/E casuals whether they held their own public liability or not. You need to talk to a broker who knows our business if only to check whether insurance as a musician covers you as a PA hire business. 

As long as the casuals are really self-employed and you record their UTR and they issue you with proper invoices that is about it. When I did employ casuals I made sure they were fed, watered and rested but that should come naturally. 

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8 hours ago, kerry davies said:

As a production/site manager I rarely employed casuals but I always held employer's liability insurance because in telling contractors how to work, where to run cables etc I was in place of an employer. I guess you would be in the same boat with S/E casuals whether they held their own public liability or not. You need to talk to a broker who knows our business if only to check whether insurance as a musician covers you as a PA hire business. 

As long as the casuals are really self-employed and you record their UTR and they issue you with proper invoices that is about it. When I did employ casuals I made sure they were fed, watered and rested but that should come naturally. 

My understanding is the mere fact that you pay a s/e persons invoice automatically makes you an employer which is why some of us soletraders who work together have  avoided invoicing each other. I too have always held employers liability as I have always believed it makes things so much tidier.

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1 hour ago, timsabre said:

Paying a self employed persons invoice does not make you an employer. Unless they only ever work for you. 

This. I pay my (domestic) plumber and any other contractor I have round to my house when they present me with an invoice. I'm certainly not their employer though, I'm their client.

I think the key term to google here is "contractor vs employee". There's a table on this page which seems to put it fairly clearly:
https://www.highspeedtraining.co.uk/hub/differences-contractors-employees/

Whilst Kerry's post above generally covers it, with regards to contractor vs employee, the main grey area that I can see is that of "Time and Place", and maybe "Job Role", however, one could possibly argue that me saying to my plumber "The job of swapping the boiler out and rejigging the pipework needs to be done at my house, between 9 and 1", is effectively the same as saying to @Triode's mate Disco Dave "The PA needs to be set up by 7pm, you can get in from 1.", although as the equipment is yours, you will have a duty of care under various bits of legislation to ensure it is safe etc, on a slightly more industrial scale than me lending the plumber an extension lead and making sure there are no big holes to fall through in the floor.

From what I understand in my brief bit of google research, as the contractor is working for you, you still have a duty of care to ensure competency and a safe working environment etc, but so long as the brief is kept along the lines of "this is the objective, it needs to be done by X o'clock, materials will be onsite, you bring the tools, crack on" then you are probably more at the 'contractor' end of the spectrum?

Edited by IRW
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10 hours ago, timsabre said:

Paying a self employed persons invoice does not make you an employer. Unless they only ever work for you. 

It does for insurance purposes and, as Ian writes, from a HASAWA/duty of care perspective. It can be hard to get your head around but a "person at work" may be employed, self-employed or unpaid as far as HMRC is concerned yet be an employee for all other law. 

The AXA website states that EL covers; "Full-time and part-time employees, Self-employed contractors you hire, Temporary staff, apprentices and volunteers and People taking part in work experience or training schemes." 

 

 

 

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In answer to your first question it all depends. As far as tax is concerned strictly speaking I can't see how anybody who works under your direction with your equipment on a date and at a place that you specify can be counted as self-employed for that work - especially if they have no other customers. They are not self-employed they are workers in employment status terms.  Employers Liability Insurance is essential of course but it is as well to also remember that you can't just take on these workers and leave them to it - things have moved on from the days when you could pay someone cash in  hand for a bit of heavy lifting. If anything goes wrong and you haven't done the right induction and training no matter how trivial/unnecessary it might seem and taken real care of compliance with safety (as it seems you won't be on site) there will be trouble. 

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How about if @Triode's contractor invoiced the client directly for the work, and Triode invoiced the client (or even his contractor) for the equipment hire? Would this limit Triode's liability to ensuring the equipment is safe for use?

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23 minutes ago, IRW said:

How about if @Triode's contractor invoiced the client directly for the work, and Triode invoiced the client (or even his contractor) for the equipment hire? Would this limit Triode's liability to ensuring the equipment is safe for use?

One of the bigger jobs I've done for 7 years there are 3 sole traders working together and the job is quite easily split into sections from the customers point of view, all 3 of us are registered with the customer as 'suppliers' so we simply invoice individually. However we go round and install each of the 5 zones and infrustructure together.

I have no idea what the insurance would make of it if there was a problem though.

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Another thing that you need to be aware of, is that since the IR35 rules came into force if you engage anybody who will carry out work for you who is set up as a Limited Company (rather than sole trader), you must carry out (and record) a CEST assessment, link below. Not doing so could theoretically leave you liable for tax payments.

The assessment isn't onerous, I engage many freelancers a year (as well as many employees), around 20% of whom operate as Limited Companies. It's not as straightforward as whether they only carry out work for you any more. Once you complete the form and get a determination, just save it somewhere, and HMRC will be bound by it should there be a question over it down the line at any point.

Despite the mention of contracts, we've been advised that any booking or verbal agreement to carry out services could be construed as a contract.

CEST tool

 

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That particular test only works where they are operating as an employee - and you are the employer, so in the typical entertainment industry scenario, it's doubtful if the answers will be binary - in terms of the questionnaire allowing HMRC to change their mind. There is a great deal of interpretation so this particular 'test' is prone to produce wrong answers. The usual process of people doing things to instruction normally determines the people as employees. In our industry working to instructions is a different process. Construction Industry modes of operation have crept in. Consider two scenarios - you hire a load of equipment from somebody like say, Orbital, and a person to run FOH. The invoice says hire of XXXXXXXXXX and operator. That person works for Orbital - as a staffer, or self-employed person, you maybe don't even know their status. You have an invoice from a large Ltd Company for equipment and services. Or, you went to the local audio firm, a much smaller concern but a Ltd company with just one employee - the front of house person. That test on the HMRC site will produce identical results. You get equipment and a person. You give that person instructions, you tell them what time to arrive. 

 

The purpose of that test is to give certain types of business protection from the HMRC coming back afterwards. It might determine you are the employer of the person who works for Orbital? They will presumably disagree you are that staff member's employer?

The hierarchical system we use makes the questionnaire fail? We can't have a system that says a big firm get a different decision to a small one, and if it is a one man band, that person is still an employee of their own company - and HMRC will be collecting tax and NI from them already, and it will be detailed on their own self-assessment. Can a single person be employed by two entities for the same work at the same time? If you determine  they are your employee, and their own company also determine that they are theirs - that cannot work. 

 

Using this new 'test' will generate very complicated status reports - the intermediary determination is not how our usual tax system works - we don't have them. The construction industry do, along with a few others, but our way of working - which is known to HMRC doesn't fit the system, now HMRC are using it for authenticated decision making - it sort of guarantees a false result? I've always done what Kerry does - make sure the people I use are 'real' self-employed people. If the answer to "what is your UTR?" is "what's that mean?" it's too risky. Other than that, I'll take the risk.

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@paulears There's undoubtedly truth in many of the points you make however...

HMRC commit to standing by the results of that test if answered as accurately as you are able, the test is (at your choice) anonymous or tied to an individual, so you only need to record the result when it shows the 'correct' determination, and the test itself will either give categoric answers, or simply tell you that it's unable to determine. The only actual risk is in not carrying it out, and it biting you down the line.

As you say, it is for instances where you are the employer (or could appear so), so you wouldn't run the tool if you got kit and staff from Orbital, nor would you if you contracted a smaller company in the situation you outlined above. 

Where it is relevant is if I book 'Steve' for a month's work, and I know that he's going to invoice for that work through a Ltd Co. I would be filling it in for my company's protection.

The rules have been introduced solely because of the feeling the HMRC were losing out on tax income due to the structure of Ltd Co and payment of dividends etc.

I understand that you don't agree with it, but I'm not sure that that's relevant. I posted it because some people may not be aware of it, and I think people should be so that they can avoid assuming liabilities that they would have had no cause to expect.
 

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I get you. I picked orbital as a good example because their people often get mixed up with crews working either as individuals as employees or as sole traders, invoicing and I seems to work. 
 

At least now there is, with the status of the tool, some peace of mind.

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