Paying freelance workers as a sole trader

dano1066

I am registered as a sole trader and I pay my taxes through an annual tax return. I am not quite big enough to be going down the road of being a registered business. I occasionally find myself with more work than I can take on. When this happens, I have some people I can call on to use my equipment to do the work and I can pay them for it. I am not sure what to do in terms of tax though. If I get paid by a customer and give 200 euros to someone for helping me, how do I declare this? The invoice from the customer will say X euro but I had to spend some of this for the freelance help, so it is an expense.

Like any expense, I am probably going to need an invoice but these lads aren't going to know how to do this. Even if we use some invoice template from the internet, surely it will be seen as a red flag that these people might be made up and I'm trying to avoid paying tax. I could end up with lots of expenses that i cant expense and it will cost me a lot. Is there any way around this outside of registering as a business and employing the workers?

ThreeGreens

If "these lads" don't know how to do an invoice then they almost certainly aren't self employed themselves, and are in fact your employees.

Therefore you need to register them as employees, and operate payroll taxes on them.

For the best advice, speak to your accountant who will be more familiar with your situation and structure, but if "the lads" don't seem themselves as self employeed and aren't accounting for their own tax on the money, then it very much is your problem, not theirs.

BattleCorp

And if they are considered to be your employees, then you are responsible for a lot more than just their tax affairs. There's a pile of training, health and safety and insurance stuff you need to be thinking about too.

Ask yourself the question, what would happen if one of them got injured and claimed off you?

NUTLEY BOY

There can be a subtlety involved as to whether another party is an employee or an independent contractor or a sub-contractor.

There are a number of tests to determine if someone is an employee. The principal test is that of control. Specifically, does the possible employer have the right to control the method of working as distinct from simply specifying the end purpose to be achieved ?

If the quaintly termed "master/servant" relationship does exist the employer faces exactly the issues set out by BattleCorp at #3.

Side-bar point. If the alleged employees are actually independent contractors the principal who engaged them is, generally, not vicariously liable for the negligence of those workers. Conversely, if the workers are employees of the principal that employer is, generally, vicariously liable for the negligence of the workers. I use the term "generally" as the issue is not always clear.

Mrs OBumble

Either way you need to review your public liability insurance provisions. You may also need employers liability insurance.

The fact that you are still registered as a sole trader is irrelevant. But it may increase the risk you would lose your house, car etc if someone sues you.

Eggs For Dinner

The fact you mention that they use your equipment is another indicator that they should be considered as employees, in addition to the other points raised above