Flat Fees

[Brian]

I know none of us are tax lawyers but what are people's interpretation of job offers that specify a flat fee for a period of time?

Were that period a year then it'd clearly be the offer of a PAYE job. And I can't help feeling that it would, in HMRC's eyes, be the same for a shorter period of time.

One of the tests of true self-employment is that the person offering their services sets the rate they expect to be paid.

[timsabre]

In my opinion, you would invoice an amount for doing the whole job and that would be fine. My accountant has always advised not to state hourly rates or times on an invoice but just to invoice your charge for doing the job.

HMRC would like to make everyone think that everything should be PAYE, but until they have the legal precedence behind them to back that up, I think it's not the case yet.

[Brian]

28 minutes ago, timsabre said:

In my opinion, you would invoice an amount for doing the whole job and that would be fine..

And that's how I would do it. However, I'm interested in the other end of the process, ie the job ad.

[timsabre]

Ah I see what you mean. I just took the period of time as information about the required commitment. So what you are asking is, would HMRC link a job advert with an invoice and use it to prove that the job should have been PAYE. I think this is very unlikely, but I guess possible if they are doing an in depth investigation on you.

Edited July 13, 2022 by timsabre

[Junior8]

Tim in quite right in his advice about invoicing but on the general question of a flat fee ad as was discussed in another thread I cannot see any way in which such a contract would pass the simplest self-employment test. (Sorry Tim I was typing as you were posting!) However as far as HMRC are concerned I don't think they'd be that interested since the tax lost would be a maximum of £500 and the kind of person likely to be interested in the work may well not have used their full personal allowance for the year anyway. There is plenty of case law to back up HMRC's stance on self-employment but unless a company was avoiding very large amounts of 'ers NI contributions I don't think they'd be that interested in a few weeks in Edinburgh.

Edited July 13, 2022 by Junior8

[timsabre]

The thing with HMRC is, they take the position that if there is any doubt then it's PAYE. If you need to ring up and ask - it's PAYE. If you use their online checker - it's PAYE. I don't think a lot of it would stand up in court if it came to that, but they seem to be hoping that they can frighten everyone away from self employment without actually doing too much enforcement.

[kerry davies]

I don't pretend to be current and this article  has made me less certain but I used to take on work on a consultancy basis which covered specific time-frames and a set fee to, in one case, "provide support to community festival programme" and in another to "deliver a project on community cohesion through events". 

In both cases there could be no hourly rate because there were no set hours. Whether that suits what you require I don't know but "consultancy" is a wide ranging and vague concept.

[Junior8]

I am not surprised at the decision in the case you quote Kerry (thanks for bringing to my attention) but in reality it relates only to those using a limited company to provide a service which is either solely or mainly under the  control of the client. In reality the contractors are paid to perform as known at a particular time and place under the control of others though they work cooperatively in some respects. (In this particular case too the judge was given a percentage breakdown of the proportion of the payments from the client relates to the turnover of the contractor limited company annually. In no year was it less than 95% and in three years 100%.) The judgement which runs to 59 pages turns mainly once again on just how much control the client had in  providing the services both in reality and the contract as it was drafted. The judgement makes interesting reading (for those who would like to know just how tax law works) but doesn't affect those who have a number of clients and complete control. 

I agree though Tim as each of these cases comes before the tribunals and will inevitably go either wsy getting any idea of what is and isn't OK won't get any easier. Though following the 2019 changes they will get less and less pretty quickly...

Edited July 14, 2022 by Junior8