smallbusiness.co.uk: Helping your business think big

The question with employing someone who is themself self-employed is, what is the real contractual relationship between the parties? What starts out as one type may change over a period of time to another. Someone who is genuinely self-employed will be “of interest” to HM Customs and Revenue in a different way to an employee. They will want (if you are ever investigated) to see a copy of the contract for services. No such contract means almost certainly that the Revenue will regard him/her as an employee and that means trouble. So, firstly make sure you have the proper contractual terms in place.

Secondly, if he/she is genuinely self-employed then they are free to refuse or accept work from you at will. If they also sell for other organisations, to which they provide services, are they in fact an ‘agent’? If so there is legislation, inevitably these days, originating from Europe, regarding agencies. Since such contracts are commercial contracts and not employment ones, and the dividing lines sometimes can be very fine it would be prudent to take advice from a solicitor specialising in that field.

It might be easier to actually employ the individual as the law is simpler and easier to obey and you will be in a much better position of control than if they were self-employed!

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