When you pay for the services of a self-employed worker, you (the client) are responsible for:
Failure to meet either of these conditions could land you with a large bill from HMRC as and when they inspect your accounts, more likely in sport now that they have announced that they have begun a campaign to specifically look at coaches, tutors and instructors.
If you have been paying a self-employed person, perhaps for many years, and it turns out that they have never registered as self-employed, you could end up having to pay for their back tax and national insurance (NI) if you haven't got something in writing that states they are self-employed. The best solution? You need a contract with them that has a clause in it that states they are 'self-employed and responsible for their own tax and NI'. Many clients in sport, especially clubs, don't have a contract with their self-employed workers and so could be vulnerable if their coach isn't registered or deregisters. Don't take the coach's word for it that they are registered - it's your responsibility so get a contract!
If you pay for the services of a self-employed worker, you will need to satisfy yourself that your working relationship meets the HMRC rules (or guidelines as they like to call them) for self-employment.
Failure to meet the guidelines would result in your worker being deemed to be an employee of the club and the tax authorities would then potentially demand back tax, interest and penalties from the club. Failure to meet the guidelines could also result in the worker taking you to a tribunal for employment rights they have never enjoyed, such as holiday pay and sick pay.
The easiest way to check if you are meeting the guidelines is to go online and use the HMRC software called the Employment Status Indicator but be warned - the questions it asks you are not very clear for our industry so you need to be sure of what you are answering. We can advise you on how the guidelines work and how to set your working relationship up to meet them, either through our Business Essentials course, through our consultancy service, or via our membership scheme.
Once you have determined how best to work with your worker to meet the guidelines, detail it all in the contract. This will be your proof that you are meeting the guidelines (assuming of course that they accurately detail what you are actually doing!).
One word of warning - there are sample contracts out there that we have seen that state that it is the self-employed worker's responsibility to meet any guidelines. THIS IS NOT CORRECT AND YOU CANNOT GET AROUND THE GUIDELINES BY USING SUCH A CLAUSE. The clause will be ignored by the tax authorities and you will then find yourself with problems! We can provide you with an inexpensive sample contract if you need one - contact the GBSport office on 01952 620099 for further details.
Mike is the founder of GBSport and provides expert consultancy to a number of sporting agencies and national governing bodies