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I have a job with a company but rather than paying me through the PAYE system they want me to provide them invoices for my hours and then I am paid directly.

I have a couple of questions about this. The UK tax website has a list of things that indicate if someone is an employee or an independent contractor. According to that list I am definitely an employee. Does that not mean they are obligated to pay the employer's part of national insurance. It concerns me that they will not be doing this.

I am also concerned about filling in a tax return at the end of the year, I do not want to make a mess of it and get in trouble with the tax man, and it's uncomfortable not knowing how much of the money in the bank is actually mine.

I also would be eligible for paid holiday a certain part of the year if I was on PAYE which I am not currently daring to ask for given the fact that I am only invoicing a week at a time and could no doubt be told to just not bother if I made a fuss.

Is it actually legal for them to be paying me this way given the circumstances?

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Are you being paid through a limited company or an umbrella company ? Are you self employed

If not what they are doing is illegal. If you are being paid a salary, then the employer has to contribute their part of National Insurance. I believe they are treating you as self employed, hence asking you to generate invoices. Check your contract wordings properly. Or get help from Citizens Advice. Call them or visit their local office. Or else do call up HMRC.

But if you are invoicing them, I would assume you are self employed and you have to do your self assessment. Get in contact with HMRC and ask them to generate your Unique Taxpayer Reference (UTR). THey will send you the UTR and using this you can fill your tax returns.

It looks like cumbersome now, but it isn't so. You can do it yourself, I do mine. Or at the end of the financial year, get an accountant to do the returns for you, probably should charge you £100-£150. Keep all your invoices, bills, bank statements safely.

This is some help from HMRC website

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  • According to the list of questions here I it doesn't seem like I am self employed.
    – DumbBrunette
    Commented Mar 3, 2014 at 12:45
  • I would say call up HMRC or Citizen's Advice. They are defrauding you and HMRC, by showing you as self employed while you aren't. You are losing on your insurance benefits. And get your contract read by a solicitor dealing in employment matters. Visit CAB for such help.
    – DumbCoder
    Commented Mar 3, 2014 at 12:49
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The short Answer is NO, HMRC do not like disguised employment which is what this is as you fall under IR35 you can bill them via an umbrella company and you should be charging the contractor rate not a permie rate.

http://www.contractoruk.com/

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