Just off the phone with my now-distraught 85-yr old mother.....
My mother needs help cleaning the house and has for the last 8 months been paying a Spanish girl to do 7hrs cleaning a week in her house. She has given the girl a receipt for this work stating hours and amount paid (I believe at minimum wage). The girl also works as self-employed Spanish teacher.
Tonight, the girl phoned my wife (who is Spanish) and informed her that HMRC have classed her as "employed" by my mother (regardless of her self-employment as Spanish teacher). Needless to say this is not the assumption that my mother has been working under as there is no chance as an 85yr old pensioner (who has handed over most of her financial affairs to us children as trustees) she would commit to that level of paperwork - the assumption was that this girl was self-employed as, i think, most would in that situation.
I think that the situation has been prompted by the girl having to fill out her tax return and whatever she's been told by HMRC when she's requested help for that.
So... what are our options here for a way forward? I've informed my mother that the girl is to do no more work until the situation is clarified.
The bit about her being a spanish teacher is irrelevant so let's forgot that.Originally Posted by Scepticalist
This can be complex but here's a couple of simple indicators - Can your mum's cleaner send someone else in her place and does she bring her own equipment to do the job?
I'd have to confirm but I'd guess no on both counts. The girl is a single mother and wanted some work she could do in hours when the children were in school to supplement income. She's part of the church my mother goes to and pretty sure no more thought went into it.
I suppose the follow up question would be what do we do if it is assumed she was an employee?
If, she is deemed employed, then you are liable for Employers NI, and possibly employees NI under certain situations. It’s a bloody nightmare, and you should fight it - but you need to understand the rules, and what you are trying to prove/show.
It's just a matter of time...
From an employer's point of view, it's not too complicated, except that she may have to account to HMRC for the payments already made and going forward, on a quarterly basis.
At 7 hours x £8.72, there won't be any liability for NIER and unless she earns bundles elsewhere, the girl won't be liable for tax/NI deductions. The only things your Mum would be liable for would be holiday pay 28 x 1/5 = 5.6 days per annum and the requirement to 'offer' a Workplace Pension. I suppose the other thing to do to ensure compliance with the law is to draw up a Contract of Employment, but that should be pretty straightforward.
As the IR35 legislation is now looking to go ahead unamended next April, on the balance of probabilities, the employed route would seem to be the safer option to avoid any HMRC snooping.
I would argue that she is self employed as I expect your mum would accept a substitute and flexibility around hours, how the job is done etc.
IF she is employed then she is also probably obliged to offer her a pension too (and contribute to that) as well as NI, submitting reports to HMRC each month etc. I have to do payroll each month - definitely avoid this route.
A very good friend was investigated and they considered him an employee, with quite considerable, onerous, and expensive consequences for both him and his client (the deemed employer). Thankfully he went to school with a current partner of a big 4 firm in the London office, who kindly took the time to defend his case on appeal - thankfully they overturned their decision.
No bloody cleaner I’ve ever used in a private residence would be considered as an employee!
It's just a matter of time...
If your mother is the only ‘client’ that the girl cleans for, then the girl probably falls under this law:
https://www.gov.uk/au-pairs-employment-law
Young (Foreign) girl, 7 hours a week, cleaning, minimum wage, trying to work hard it seems, 85 year old ‘employer’... why the heck didn’t mum just pay in cash and keep it like that?
I’d approach it by asking a serious of questions as per below and collate the answers and appeal to HMRC to overturn
1. Is there a written contract in place
2. Was the work done on a “cleaner wanted” or “position offered” basis
3. Are any employment conditions offered or implied - such as holiday time holiday pay etc
4. Did the cleaner submit an invoice for payment each week that your mum then gave a receipt for?
5. Does she only clean exclusively for your mum, or does she clean for others too
Certainly looks and sounds like a self employed position to me but as was mentioned previously the cleaner may have filled in her self assessment wrongly and that’s created the issue. Hope it works out.
I think it is exactly this. She has selected employed rather than self employed.
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And a fairly simple mistake to make if you are not familiar with these things. Hope it can be corrected without too much fuss.
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She did, it was the girl who declared the income to HMRC. We're pretty sure deliberately so because the benefits office told her she had to get a job (obviously they don't want her claiming support).
It's a combination of language barrier, the girl being intimidated by benefits and HMRC and complete misunderstanding between the 2 parties. It's a shame for the girl as now we've had to tell her that she's not getting any more work and may never get any more if HMRC insist she acts as an employee. My mother will ocntact a professional company if needed instead.
We're not overly worried about the cost implications as they're minimal in the grand scheme of things. Fortunately my mother can afford to set things straight if she has to, but the paperwork is going to be a complete pain and it's going to fall in my lap to do it. As advised by Rusty, we're going to point out that an employed position was never offered and the circumstances indicater this strongly - especially as us children have power of attorney for my mother because she's not really with it enough to conduct financial affairs beyond her daily shopping and paying bills on direct debit etc. IF an employed position was considered, we'd be the ones administering it.
It's going to be a pain but I'll commence conversations with HMRC next week.
Last edited by Scepticalist; 1st August 2020 at 13:04.
Honestly I think it’ll be sorted in a week. It’s a clear misunderstanding.
The question of status, employed or self employed, is often challenging but it follows the facts and IME the majority of cleaners in this situation would be regarded by HMRC as self-employed because they could send a substitute, choose not to attend, propose an increased rate, have to correct any errors or damage at their own cost/time and often provide some of their own equipment to mention just some of the common factors.
HMRC ought to be helpful when you speak with them and given the amounts involved they ought not to be very interested; HMRC can determine the status where they believe it is incorrect but compliance officers are looking for bigger cases as so wouldn't be interested in a case like this unless there was a genuine dispute.
It would be worth discussing status with the cleaner as she may be in time to amend her return if she agrees she was self-employed (assuming she has completed it as an employee) and the problem would likely then be resolved.
Last edited by deepreddave; 1st August 2020 at 21:34.
An update for those interested.
After speaking to girl; as suspected she was told by the benefit office she had to "get another job" on top of her Spanish lessons. Of course anyone with native language would realise they wanted her to earn more money (the more she earns the less they have to pay her) but she took this as needing an employed position. In another language-barrier moment, my mother obviously thought she just wanted a little extra money from cleaning.
Anyway - we told the girl she can't clean for my mother any more until this is sorted out (and unless she is self-employed doing it). She then told HMRC that she's not working for my Mum any more and they then told her to put all the income down as "Other income" on her tax return rather than paid employment. WTF?
She's now decided not to do any more cleaning until her children go back to school in Sept and will phone up HMRC and "Ask them if I can do cleaning as self employed". She's not preapred to take our advice on it as she's naturally nervous of both HMRC and the benefits office.
Of course now both the girl and my mother have lost out. We're just going to advise mother to find a proper cleaning company with a decent hourly rate and use them.
We'll just keep all the paperwork concerned and park the issue now, I think it's highly unlikely for anything else to come of it
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