Employed vs Self-Employed
Guidance related to HMRC Employment status
The following information and guidance outlines Queen Mary University of London's legal obligations and process to be followed, to comply with HMRC's employment status requirements.
HMRC Employment Status - context and why we need to comply?
- It is a legal requirement for Queen Mary University of London, and its associated companies, to comply with HMRC regulations, to ensure the correct employment status is determined when someone is engaged to carry out a specific piece of work for QMUL (e.g. a one off piece of work rather than full-time employment).
- It is important to determine a worker's correct employment status, to ensure the correct tax and National Insurance contributions (NICs) are paid to HMRC.
- Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement and the results of the HMRC'S Employment Status Indicator.
- QMUL's obligation as an "engager"- is to correctly determine the employment status of our "workers" in accordance with HMRC regulations.
- Worker's obligations - if you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.
Significant fines can and have historically been levied on Queen Mary University of London if we incorrectly treat an individual.
Consequences of non-compliance
- HMRC have the right to audit organisations to check for compliance with the Employment Status regulations and we need to be able to demonstrate our compliance.
- Non-compliance with HMRC legal requirements can result in Queen Mary University of London:
- incurring penalties from HMRC.
- being requested to pay over the tax and National Insurance contributions (NICs) for anyone who should have been classed as "employed" rather than "self-employed" which we may not be able to recover from the individual and therefore becomes an additional cost to Queen Mary University of London.
This would not only have an impact on the University's reputation, but also on the budget available to spend and consequently the financial operating position.
Steps to help you make a decision
- Queen Mary University of London related guidance has been produced in accordance with HMRC regulations to be used if you are involved in engaging someone to carry out work for the University.
- The guidance has been designed to walk you through the decision process, so that you only refer to relevant information, to help you determine someone's employment status and to enable you to follow the correct process when engaging the person concerned.
- Following the Queen Mary University of London guidance and process will ensure the relevant audit trail is available, in the event of a HMRC audit taking place.