Many employers and affected individuals remain unaware of the Social Security (Categorisation of Earners) Regulations 1978. These overturn the common law employment status of certain workers with the result that the employed/self-employed status may be different for tax and NI.
Of particular concern - and great cost if the wrong treatment is adopted - is the group of people that the Regulations specify must be treated as employees for NI purposes. These are:
As is clear from this list, the Regulations do not affect every business but for those it does affect the costs can be significant.
HMRC have also been known to try to attack the most unlikely activities; for example, stretching the category of teachers and instructors to approach driving instructors, first aid trainers and those running summer playgroups. We believe that many of these approaches are incorrect.
We are also expecting renewed activity in the leisure and entertainment fields in the near future.
If your business engages people carrying out any of the activities mentioned above you need to be aware that the special rules exist. If you are not already applying them, you would be well advised to seek guidance as to whether your own circumstances require their application. Otherwise a visit from the taxman might come as a costly shock!