Whether an individual is an employee or self-employed in a particular situation is a question of fact depending on the terms under which he or she works. When you engage someone to do work for you, you have to decide whether or not to apply the PAYE rules. It is up to you to get it right or suffer the consequences. Unfortunately, even the DSS and the Inland Revenue do not always agree on an individual’s status. In certain areas, the Inland Revenue and DSS have placed emphasis on reclassifying individuals claiming to be self-employed. They have jointly issued a leaflet, IR56/NI39, Employed or Self-Employed? FWD can help with any employment status, such as…..
- The degree of control and supervision exercised over the individuals work.
- Whether services are performed mainly or wholly for one business.
- Where the duties are performed.
- Terms of pay, holiday entitlement, pension arrangements, and other benefits.
- Whether the work has to be performed personally or whether a substitute may be supplied.
- Provision of items of equipment.
- The financial risk and responsibility for loss undertaken by the individual.
Please note: We strongly recommend that if you are in any doubt as to the status of an individual, ask the Inland Revenue to clarify the situation. Obtaining their approval will avoid the risk of you having to make a settlement of liabilities to tax or NI that you have failed to deduct from the employee’s remuneration.
Before establishing a PAYE system, FWD will notify the Inland Revenue office covering your geographical area by completing and returning form P223 (Notification to the Inland Revenue for registration). Upon registration, the Inland Revenue will send you guidelines on operating PAYE tax, National Insurance, statutory sick pay and statutory maternity pay (Cards CWG1), including a number of forms with which to operate the PAYE and NI systems. (See checklist below). FWD will calculate the amount of tax and NI due by your employees, The tax and NI should be paid to the Inland Revenue by the 19th of the month following that in which the salaries were paid.
FWD will organise the following forms:
- P11 Deductions Working Sheet.
- P14/P60 End of Year Return and Employers Certificate.
- P11D Return of Expenses Payments and Benefits.
- P35 Employers Annual Return.
- P38 Employers Supplementary Statement.
- P45 Details of Employee Leaving.
- P46 Notification to the Revenue where no code has been notified to the Employer.
- P46 (Car) Notifying car for private use.
PAYE can be a tortuous procedure for the new business person. We would be happy to show you how to operate PAYE correctly.
Please contact us if you would like help with your PAYE.