Employment Status Tool
Payment of Individuals
Self Employed Consultants
Departments occasionally wish to engage the services of self employed consultants, perhaps to provide highly specialised input into gathering or analysing research data or to act as advisors in dealing with research sponsors.
When we enter into these contracts (known as "engagements"), HM Revenue & Customs (HMRC) deem it the University's responsibility to decide whether the engagement is one of employment or self-employment.
It is often difficult to make a judgement whether someone is employed or self-employed when we have situations where individuals may be working at the University on a regular basis or for a lengthy period of time. We can't rely on the individuals telling us whether they are self-employed or not.
We need to make a decision based on the facts of that particular engagement. Our new procedures are designed to ensure that we make the correct decision and so minimise the risk to the University. We have attempted to simplify the process as much as we can but you may still wish to consult with Finance due to the complexities around the legal tests.
What is the new procedure?
The new procedure only applies to contracts with individuals. It does not apply to contracts that we enter into with Limited companies or partnerships (as there is no tax or NI risk to the University).
For each contract, the Self Employed Status Indicator Form (Excel, 41.3kb) should be completed by the engaging officer. This is a mandatory requirement and without it no payments will be made through Accounts Payable.
Following completion of the Employment Status Questionnaire if there is any doubt as to the individual's status, you should speak to Stuart Preston in the Finance Department who will be able to assist you further.
If the individual is deemed to be an employee, they must be paid via the University's payroll and subject to tax and NI deductions as appropriate. You will need to set these individuals up on the payroll system before payment can be made and complete a PF1 (Word, 58.4kb) to return to the Payroll office (D28)
If the individual is deemed to be self-employed, a copy of the questionnaire should be forwarded to the Accounts Payable (creditors) team in room D39. No invoice will be paid by the creditor's team until the signed employment status questionnaire has been received or if the questionnaire does not indicate self employment. It is very important that we keep an audit trail in the event of a HMRC enquiry to show how we arrived at the decision the individual was self-employed.
Departments should, wherever possible, have a written contract with a self-employed consultant rather than relying on a verbal agreement. Ian Stow in the Purchasing Office will be happy to advise on any contractual or tendering issues. Alternatively please view the Purchasing website.