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Pimlico Plumbers decision - check employment status for tax purposes

Article posted: 13th June 2018

A court ruling which today decided that a self-employed VAT-registered plumber was entitled to workers' rights having worked for Pimlico Plumbers for six years looks likely to impact the way businesses engage with self-employed individuals in the future.

Matt Reid, Senior Tax Adviser – Corporate & Business Taxes at McBrides Chartered Accountants in Sidcup, says: “While today’s ruling will present a legal headache for HR teams and businesses engaging individuals, there may also be some queries now about how such individuals should be taxed or how they should pay tax.

“HMRC has a useful employee status indicator tool which can help small businesses, workers providing a service and agencies placing a worker to provide an indicator of a worker’s employment status for tax purposes. It is available at: https://www.tax.service.gov.uk/check-employment-status-for-tax/setup.

“You will need to know: the worker’s responsibilities; who decides what work needs doing; who decides when, where and how the work is done; how the worker will be paid; and if the engagement includes any benefits or reimbursement for expenses.

“The service is anonymous, and you can print the result for your own records and future reference purposes. However It should be only regarded as an indicator and not as a substitute for seeking proper, formal advice from a professional adviser.

“Of course, it is very likely that there will be further repercussions on this case in due course. However, ensuring that you have taken the necessary action to determine status through this tool could help you and your workers in future.”

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