Q. I have a project coming up where I’m considering hiring a friend to help with the workload. I have a limited company. My friend however does not, he’s a permanent employee who would just help me out with occasional work.
So my question is – what would be the best way to pay him? Can he just do some work, invoice me, then apply for self assessment and state how much he’s earned? Are there any downsides to that? Is there anything else to be considered?
A. Your friend can certainly work on a self-employed basis and invoice you for the time spent on your project. As you say, he would need to register for self-assessment if he isn’t already and declare his income.
Also ensure that there is a contract in place between your company and your friend, which clearly shows that he is self-employed and not an employee of your company. If a sole trader’s employment status is called into question, it is the engager (i.e. you) who would foot the bill for any liabilities.
Engaging helpers is a positive point from an IR35 perspective, so doing this will aid your position. The real golden bullet is substitution – so if there was ever a chance of you actually sending your friend in your place (even for a day or two) – this would stand you in good stead if you were ever unlucky enough to be selected for an enquiry.
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