Tax protection for contractors

If you take on self employed sub-contractors please note that the Taxman is taking a new approach as to who should pay their tax bills, in certain circumstances.

If he says your subbies are really employees of your business he will now come after you for the whole of their tax/NI bill. In the past you would only have to pay the shortfall of tax after taking into account the self employed tax already paid by the subbies. Subbies can be deemed to be employees in many circumstances - ask your accountant if this could apply to you.

The tax liability can cover the previous six years which is when the amounts can really start to add up.

Our recommendation is to get your subbies to sign a tax mandate which gives you permission to offset tax paid on their self employment record against any tax bill you might be landed with. Make this a condition of your contract with them.