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Engaging self-employed people or Suppliers who offer a service (not goods)

Engaging self employed people for work

Engaging self employed people for work

See below for details about when to follow the IR35 Process‌ and what you need to do.

Most individuals engaged to conduct work for the University are employed via a contract of employment which is either:

  • Permanent (open-ended)
  • Temporary (fixed term)
  • or Casual via our Temporary Resourcing Unit

There are occasions when the University may need to engage an individual or company for ‘services’. This could include work done on a very short-term or one-off basis (e.g. to deliver a lecture on a specific topic or contribute expertise to a particular project) or could involve a more long term project. 

Where ‘services’ are procured on a self-employed, OR other business structure basis (this includes contractors through an agency) a ‘contract for services’ may be appropriate. In these circumstances the IR35 Process must be followed.

Self-employed workers are not entitled to statutory employment rights.

Please note Director level approval will be required for temporary engagements over £5k including self-employed/ IR35. This can be shown by forwarding an email from your Director, or signed PCW, approving the engagement to ir35@exeter.ac.uk.

IR35 Tax Legislation states that where an individual offers services through a company (self-employed and Personal Services Companies) and the nature of the relationship is more akin to an employee, then the individual should be taxed and pay national insurance as if they were an employee.  In this case we pay via our casual claims process.  If the nature of the work is truly self-employed, then we can pay via our standard procurement process (e.g. invoice).

See below for more information

It is the responsibility of the College or Service engaging an individual to make the initial determination whether the engagement is self-employed (contract for services) or should be paid via our casual claims so that tax and NI can be deducted. This will then be checked by the IR35 Team.

In the majority of cases an employee of the university would not be deemed to be carrying out any additional work on a self-employed basis.

1. Check employment status before any work starts. Each engagement must be checked in its own right according to the working arrangements required. Submit a TR2 request‌ and attach a completed online HMRC questionnaire result. Please ensure you include the name of the worker/company on the HMRC questionnaire.The TR2 will automatically come through to the IR35 team ir35@exeter.ac.uk.

2. The TR2 should be completed at least 2 weeks before the work starts. The IR35 Team will then check compliance and return back your forms with a reference number providing you with advice on the next steps.

Employment Status Quick Guide:‌

  • Permanent: An open ended  role on our establishment
  • Fixed Term Contract: A role on our establishment for longer than 12 weeks
  • Casual: A short term role up to 12 weeks
  • Contract for Services: A one off / occasional work

We offer workshops and IR35 Q & A drop in sessions for staff who contract with/engage in contracts for services.  The workshops will demonstrate the IR35 process and explain the importance of compliance with this legislation.

These sessions will be attended by the University Tax Manager or the IR35 Advisor, the E-Claims Team and Procurement members and are an ideal opportunity to raise your questions/concerns about your existing contracts to get advice on any of the risks and steps to mitigate any future challenge from HMRC.

HMRC regularly conduct audits and some Universities have faced heavy penalties for noncompliance.  We recommend to share this with relevant staff, and to come along to the sessions to ensure correct procedures are being followed.

Speak to the experts in our IR35 Q & A drop in sessions:

Dates TBA

Please email ir35@exeter.ac.uk to request an invite.

For further information and to put your name on the waiting list for a future workshop please email ir35@exeter.ac.uk.

Further workshop dates will published here depending on demand.

IR35 process

 

All forms should be completed and approved two weeks before any work commences. This will allow for the engagement of temporary workers process to run smoothly. 

IR35 taxation laws ensure that where an individual offers services through a company to a third party (such as the University) and the nature of the relationship is no different to being an employee of the University, then the individual should be taxed as if they were an employee.

PSC are usually:

  • Limited Company or Partnership
  • One majority shareholder (or with spouse, partner or dependant)
  • Individual is main beneficiary from services provided
  • Likely to be only employee
  • Work is similar to that of an employee

The key issues to consider are:

  • Would the positon normally be filled by an employee?
  • Can the Personal Services Company supply a substitute and pay the substitute and in reality is this practical based on the nature of the work being carried out?
  • Can the University move the “contractor” to a different task or project than they originally agreed to do without issuing a new contract or re-negotiating the current contract?
  • Who decides how the work is to be carried out – the University or the “contractor”? (“Control”)  This includes whether the “contractor” is required to follow University’s procedures and receive instruction which apply to employees; who decides the schedule of working hours; where the “contractor” carries out their work.  This less autonomy the “contractor” has, the more likely the relationship is to be akin to employment.
  • What does the “contractor” have to provide for the engagement? If the University provides an office, laptop, telephone, email address etc.. then the relationship is more likely to be akin to employment.
  • How is the “contractor” paid for the engagement? An hourly, daily or weekly rate is more likely to be akin to employment whereas a fixed price for a specific piece of work, payable on completion will point towards a genuine contract for services.
  • If the University is not satisfied with the “contractors’” output, would the “ contractor” have to put it right in their usual working hours at the usual rate of pay (more akin to employment) or in their own time and at their own expenses (more akin to contract for services).

University Staff who engage a personal services company to carry out work must assess their employment status.  If the result shows they are bound by the IR35 rules, the worker should be engaged through HR.  If not, they should be engaged through the Procurement route.

Further information can be found by downloading: Payment options for one-off or short term assignments

Procurement and best value

Good procurement provides the right outcome, best whole-life cost, legal compliance, reduces risk and introduces innovation. Advice is readily available on the Finance pages online.

The University is committed to implementing policies and procedures that support sound procurement practice and that act in a non-discriminative manner when dealing with both existing and potential suppliers. The aim is to promote engagement to encourage best provision and innovation thus improving the University’s reputation and professionalism. Integral to the competitive process is that suppliers should be treated fairly and openly and be given equal opportunity to bid for work if they can meet the needs and requirements of the University.

Colleges and Services should ensure a competitive/tender process takes place when procuring any goods and services clearly stating the relevant and appropriate requirements for those goods and services in terms of best quality and price. Such planning is vital and will enable beneficial and competitive outcomes.

For further information please refer to the Procurement buying page.