If someone wishes to be paid as self employed for their work then they will need to complete the University questionnaire in FULL (note: revised questionnaire and process issued May 2021). The fully completed questionnaire will then need to be returned to the department to sign before forwarding to the Payroll section to assess the contractual relationship to determine whether payment can be made as self employment or via the University’s payroll. The department will also be required to complete the HMRC questionnaire at: https://www.gov.uk/guidance/check-employment-status-for-tax#history .
Both these questionnaires will then need to be forward to Tal Dhaliwal, Head of Payroll together with any signed contract (and any other supporting details) for the work (if there is no contract, please state on the questionnaire ‘verbal agreement’).
As per Her Majesty’s Revenue and Customs (HMRC), it is the actual work which determines the status, taking into account any pre-agreed arrangements. The individual's own status is not considered by itself. The decision will then be taken based on the information supplied on whether the person can be paid as self employed and the department will be notified accordingly.
Please do not complete the questionnaire for individuals who are permanently based abroad and likewise perform their duties (which should be of an infrequent nature) overseas (see form PR1). Furthermore, please do not complete the form for Personal Services Companies that are subject to IR35 checks see link below for details; https://warwick.ac.uk/services/finance/aboutthefo/fosections/tax/ir35/
Important notes for consideration before completing the questionnaire
Please note it is not a straightforward process of saying, I want to be paid as self employed. The University needs to satisfy HMRC that the work can be paid gross as opposed to being paid taxable through the payroll. Not only are heavy fines imposed on employers for failure to comply but any taxes not deducted from payments for work which HMRC deem as employment, are due from the University. We therefore request all departments to appreciate the pressures on the Payroll department to ensure the correct decision is taken.
Some work, e.g. teaching, is generally carried out by employees. Experience with HMRC shows it is very unlikely that such work will be deemed as self employment, especially if it involves a current or an ex-employee carrying out similar duties at this University or elsewhere or if the individual is carrying out the same work as an employee elsewhere. If the University employs many others doing similar work under an employee’s agreement (as in the case of teaching) it is most unlikely that this would be deemed self-employment. Work carried out via an employment agency (e.g. Unitemps) is also generally carried out by employees.
If a similar job is already being performed at the University, we will request details of the difference between the two roles, therefore it is imperative these details are supplied along with the questionnaire to save any delays. Historically when dealing with similar cases, the view is the work is no different to that of an employee and should be taxable through the payroll.
However, each case will be judged on its own merits.
The following factors also need to be considered when completing the questionnaire:
- written contracts (as opposed to verbal agreements) can strengthen a case for self-employment (if other factors also meet the self-employment criteria). Contracts in excess of £10,000 will require the University’s Service Procurement Agreement as mandatory.
- the University may need to carry out checks regarding self employment, therefore please provide a self employment tax number or UTR (Unique Tax Reference). If you have recently become self employed and are awaiting a number, please indicate this. Note: Registering with HMRC as self-employed does not mean that you can be automatically treated as self-employed for any work that you do for the University.
- a self employed person usually has a fixed fee, please consider why the individual is paid an hourly rate (if applicable), as this usually is the arrangement for an employee.
- who exerts control over the individual's duties? e.g. is there a Line Manager? Is the work normally carried out by an employee? Who decides where the work is carried out?
- who has the right of control over discipline, absence through sickness and hours of work and can the individual provide a substitute?
- how was the individual approached for the engagement e.g. was the role advertised as would be the case with an employee?
- a self-employed individual provides their own equipment.
- is the work genuinely specialised and if so, how?
- letters from Accountants are not acceptable proof of self-employment.
Once the decision has been made, which will be for this engagement only, you will be informed by email.
If the decision is that the individual is:
- an employee - a starter and payment request form should be sent to the Payroll Department
- self-employed – attach form PR6 to the invoice and send to Tal Dhaliwal, Payroll Department. Whether VAT is payable depends upon the exact nature of the work and will be assessed on a case by case basis in conjunction with the Finance Department. All requests for payment e.g. travel expenses should be included in the invoice, not on a separate expenses claim form. The work should be coded to a General Ledger code beginning 2382 (i.e. Professional services).
If the individual has been cleared to be paid as self employed then any changes to the circumstances of the engagement which affect the original information supplied on the questionnaire (e.g. extension or changes to the role) must be communicated to Tal Dhaliwal immediately.
For further information or clarification on the above points please contact Tal on ext 22721 or email T.Dhaliwal@warwick.ac.uk