The Issue
EEBS work with a traditional family building firm, which is typical of our client base across the country. They specialise in domestic refurbishment, extensions, new garage builds etc, and general building.
The owner of the company worked regularly with the same team of multi-skilled tradesmen plus a number of unskilled Labourers. The client provided all of the plant, equipment, and materials for the tradesmen apart from their hand tools and also provided branded PPE. The tradespeople were paid on an agreed daily rate, and had previously been engaged under verbal agreements. The client runs up to four projects at a time.
The Risk
HMRC are extremely likely to view the current arrangements with all the tradesmen as employment rather than self-employment (see risks)
The Solution
After a detailed review of all of the tradespeople’s working practices, it was clear that the supply of skilled sub-contractors could be outsourced to EEBS. However, the working practices for the unskilled labourers meant they fail the supervision, direction or control test: This means they must, by law, be paid through PAYE.
There were three options for the client:
1: Engage the unskilled labours directly as employees
2: Engage them through EEBS on a hybrid engagement where they remain self-employed, but are paid under PAYE, or
3: Engage future unskilled labours through a traditional agency. This was the actual outcome: The tradesmen concerned were not prepared to be paid through PAYE and the client was unwilling maintain their direct CIS engagement, so the engagement was terminated by mutual consent, and the client replaced them with workers from a traditional construction Agency.
EEBS Solutions include:
To maintain the flexibility of a self-employed workforce without interference from HMRC
Not to be subjected to all of the costs associated with an employed workforce, including holiday pay and national insurance.
