A GUIDE FOR STAFF/VOLUNTEERS ENGAGING WITH EXTERNAL CONTRACTORS FOR COACHES/TUTORS OR EDUCATIONAL SERVICES

INTRODUCTION

As soon as you have decided that you need to use the services of an individual it is important for both parties to be clear about the terms of the use of those services. The first step for staff is to establish the relationship between the individual and Enter name of club, in other words is the individual working on an employed or self employed basis? Once this has been established it is important for Enter name of cluband the individual to be clear and agree on the responsibilities outlined by HMRC.

ESI TOOL

For the specific purpose of clarifying employment terms HMRC have provided a tool on their websitewhich can be located on the following link This is a simple tool which asks a series of questions and provides useful tips on how to answer the questions. At the end the tool provides a ruling on whether the individual is employed or self employed. In the event that HMRC rules the individual is employed on a self-employment basisyou will be required to contact HMRC and request a Unique Taxpayer Reference (UTR) number.

HMRC also advise that in the event that any of these rules change then we are required to review thedecision made by HMRC. It is important that Enter name of cluband the Individual operate within the criteria that the decision is based upon.

The ESI tool will rule that the work being carried out is on a self-employed basis or employed basis. This will provide us withtwo options, which are:-

  • Option 1 –The ESI Tool rules that the individual is contracted on a self-employment basis therefore they are required to apply to HMRC and request a Unique Taxpayer Reference (UTR) Number. This number should be quoted on all correspondence before being submitted for payment.
  • Option 2 –The ESI Tool rules that the individual is in fact an employee therefore all payments will be paid net of PAYE and NIC and submitted electronically in line with HMRC’s Real Time Information (RTI) requirements.

Option 1 – Individual is contracted on a self-employment basis

The individual is advised to apply to HMRC for a self employment registration number (UTR number). This payment would need to be included as part of the individuals’ self-assessment annual return. If this option is chosen then the individual must sign the declaration agreeing that they will declare the income and pay over any tax due.

Option 2 - Individual is employed

If the ruling states that the individual is employed then the employee should be added to the payroll software and processed accordingly. This will mean that the individual will be taxed at source with the information being submitted to HMRC electronically and the tax paid over to HMRC. The individual will receive a P60 at the end of the financial year

SUMMARY

  1. Establish ruling from ESI Tool.
  2. Print this off as it outlines the criteria for employment basis.
  3. Attach a copy of the ruling and send this to the individual together with a letter outlining the terms of agreement or contract for services.
  4. All paperwork together with the payment form should be forwarded to the Club’s Treasurer or Finance Administrator who will keep a record of this. This will be held on file in the event that we receive an inspection from HMRC.