Many consultants use their NHS secretaries to assist with their private practice administration. All too often the secretary is treated as being self-employed, with their fees paid on receipt of a monthly invoice.
Were HMRC to look into the arrangements, they would almost certainly insist that the secretary was fulfilling the role of an employee rather than a self-employed worker. It does not matter that you may pay varying amounts month by month based on hours worked or letters typed, or that the secretary “works for three other consultants so must be self-employed”, the fact is that the consultant is providing work on a regular basis and the arrangement bears most of the important badges of employment.
HMRC have several tests to weed out the employed from the self-employed, such as the requirement to receive sick or holiday pay, the right to provide a substitute worker, etc. It is not a question of simply ticking off boxes - if you have a steady arrangement with someone who works for just a few people, the position risks being classed as employment.
From a tax point of view, both consultant and secretary would much prefer to be dealing with a self-employed arrangement. The consultant would be spared the hassle of running a payroll and would not need to account for employers National Insurance Contributions, while the secretary would pay a lower rate of NIC and would be claiming for expenses that are not available to employees.
Unfortunately, what we would like and the correct way to proceed are often quite removed. Anyone continuing with such an arrangement is taking a risk. The worst case scenario would be for HMRC to insist the secretary should have been treated as an employee, and the gross amount paid by the consultant is viewed as a net salary, with the consultant being held liable for the tax and NIC that should have been deducted.
If you are caught in this sort of situation, you need to look at setting up a payroll or to give up on your secretary and use the services of an agency or a secretary who is clearly self-employed. The final option is to continue on current lines and to keep looking over your shoulder - you have been warned.
Rose Landinez runs Medic Tax. To contact her email rl@medictax.co.uk
One can’t help thinking this is scaremongering. Ms Landinez suggests that it’s almost impossible to prove that your secretary is self-employed. So why doesn’t she spell out the exact measures required for proof? She speaks of using “the services of a secretary who is clearly self-employed”. Well what IS ‘clearly employed’? can she tell us please? My secretary works for 4-5 other consultants and runs all her own financial affairs. I pay her fee per service. She has her own office and self-funded equipment. What else am I supposed to do? And what else is SHE supposed to do? Or are we saying that a police state can always bend the rules sufficient to suit itself? Peter Mahaffey