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Phoney self-employment

 

Ruth Knox
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This is a situation I came across with one of my friends.  His work is in a Barclays call centre in Speke. He was sent there by an agency and is technically self-employed. When he broke his leg I suggested he claim ESA which of course self-employed people can do. It turns out he can’t because he is not only self-employed but the company director of his own firm consisting of himself – so he should have been paying himself SSP!  Of course this is a total scam, but it’s a new twist on the self-employment avoidance of employees’ responsibilities.  Has anyone come across it?  Ruth

      [ Edited: 30 Jul 2018 at 03:22 pm by Daphne ]
Elliot Kent
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Introducing a limited company into the mix would seem to be a pretty effective way of turning an “employee” into a “self-employed” person because Courts and Tribunals are generally unable to go behind the “veil of incorporation” - the idea that the company is itself a legal person with its own rights and responsibilities distinct from its owners, even when it is perfectly obvious to everyone that the company is just a vehicle for an individual to do business.

That said, I suspect that it would generally be uneconomical to go to the trouble of having low-paid “gig economy” style workers set up and maintain limited companies of their own. I think it’s something which is more likely to happen in reasonably well paid jobs - it’s an attractive idea for the employee when paying flat rate corporation tax is less than paying income tax and NI. Of course, you’re losing out on employment rights.

This is all very alien to my normal client base but I did come across this once a couple of years ago. The lady was pregnant and ran a company like this. She had been refused for maternity allowance because she hadn’t given herself an SMP1. In the end, it turned out that there was at least a prospect that she could pay herself SMP at the normal rates and then - as the company - reclaim it from the government at 103%. Same is not true for SSP though, I’m afraid - so your friend is out of luck.

See also: https://www.telegraph.co.uk/finance/personalfinance/tax/11577936/Could-I-set-up-as-a-company-and-slash-my-tax-bill.html

     
Ruth Knox
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Thanks Elliot, as you say, it’s something you associate with highly paid independent consultants.  But my friend really is in a low paid call centre job - will have to find out more details. It would be good to know, though, that it’s not going to become a regular feature of our benefits advice life.  Ruth

     
ClairemHodgson
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the other issue with these for people with no money is the charges made by the payroll team at the firm that got him the job.  they do charge for dealing with it.
wonder if he should also be referred to an employment lawyer?  probably should be…..

     
Mike Hughes
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It’s Friday and every time I read this thread I find myself singing “phoney Beatlemania has bitten the dust”!

     
Ruth Knox
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And you are spelling “phoney” properly as well!

     
Mike Hughes
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I’m sure if you ask nicely the thread title could be amended smile

On the other hand I quite like it as it is.

     
Daphne
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Mike Hughes - 30 July 2018 11:56 AM

I’m sure if you ask nicely the thread title could be amended :)

No sooner said than done… ;)

     
Mike Hughes
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Daphne - 30 July 2018 02:32 PM
Mike Hughes - 30 July 2018 11:56 AM

I’m sure if you ask nicely the thread title could be amended :)

No sooner said than done… ;)

Tsk, come on. Where’s the capital “P”? :)

     
Daphne
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Mike Hughes - 30 July 2018 02:35 PM
Daphne - 30 July 2018 02:32 PM
Mike Hughes - 30 July 2018 11:56 AM

I’m sure if you ask nicely the thread title could be amended :)

No sooner said than done… ;)

Tsk, come on. Where’s the capital “P”? :)

You’re so demanding…sorted ;)

     
Mike Hughes
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Daphne - 30 July 2018 03:23 PM
Mike Hughes - 30 July 2018 02:35 PM
Daphne - 30 July 2018 02:32 PM
Mike Hughes - 30 July 2018 11:56 AM

I’m sure if you ask nicely the thread title could be amended :)

No sooner said than done… ;)

Tsk, come on. Where’s the capital “P”? :)

You’re so demanding…sorted ;)

It wouldn’t be the first time that’s been said!!!

My post was in jest but thank you :)