Thank-you for your interest in working for Visions Event Solutions as a freelancer. As a supplier to Visions Event Solutions of subcontracted technical services I am writing to advise you of some relevant information and set out the terms under which we contract such suppliers.
Visions Event Solutions, in common with other companies in the industry needs to be able to sub-contract technical labour and services from specialist suppliers or freelancers. This is necessary to cope with peaks in demand and is a situation we wish to see continue.
In the past HMRC have succeeded in claiming that some of these suppliers are in fact part me employees and should have Income Tax & National Insurance deducted at source as well as an additional employers NI contribution. We do not wish to have to treat all suppliers of such services as employees and we are also aware that most of the suppliers do not wish to become employees.
We have always treated the freelancers that we have subcontracted to be businesses in their own right. Unfortunately, how we regard them does not matter and the criteria for defining self-employed status is laid down in law. It is worth noting that these regulations have not changed recently, rather that HMRC have focused themselves towards ensuring that they are enforced more aggressively.
As a result of the Revenueâ€™s stance and their success in this area, it is now vital for Visions Event Solutions and the freelancers that are contract to take the necessary steps to ensure that we are able to continue our working relationship in a manner that suits us both; while ensuring we apply the correct tax treatment to our transactions.
In order to achieve this we have to be able to demonstrate that we are genuinely subcontracting services to a separate business in its own right and that it cannot be claimed that the relationship is, or should be, one of employer / employee. This requires you, as a supplier of such services to be prepared to undertake your dealings with us in a way which demonstrates and will be classified as a business to business relationship.
In order to make sure that the above conditions prevail Visions Event Solutions have a contract that we require you to sign and abide by the terms of when sub-contracting service to us.
This agreement sets out clearly the terms on which Visions Event Solutions purchases technical services from subcontractors and sets out a procedure to be followed for the briefing, quo ng & invoicing process. Some notes on the agreement appear below:
This agreement is drawn up to clearly establish your status as a self-employed individual providing subcontracted technical services to it does not add any new obligations on yourself. Please read these notes in conjunction on with the Agreement.
â€¢ An important part of establishing your status as self-employed is your right to accept or refuse any work offered to you.
â€¢ Three of the Inland Revenue tests for self-employment are financially related:
â€œDo you have the ability to maximise your profit from a contract by sound management or efficient working?â€ ; â€œAre you responsible for meeting the losses as well as taking the profits?â€; â€œDo you risk your own money in the business?â€
By way of example:
1) To reduce your costs, you might choose to share a hotel room on a contract where you were providing accommodation.
2) If you are performing contracted services on behalf of your business and you are taken ill, it is your responsibility to provide a
replacement organise their travel and arrange for your own travel away from site. In this instance your business might make a loss on a particular contract but you are accepting this as a normal and true business risk.
â€¢ As a self-employed individual you are responsible for your own tax affairs and do not receive any benefits associated with employment.
â€¢ As a self-employed person you have always had the right to provide substitute personnel at your cost.
QUOTATION AND CONTRACT PROCESS
â€¢ In order to satisfy the requirement of self-employment we must not be seen to be paying you on a me-related basis. We also cannot directly reimburse the actual travel / petrol / excess baggage expenses; at this point we would have to treat you as an employee.
â€¢ What it actually costs your business to complete the services is up to you to estimate before you quote your price and accept a contract; Per diem expenses and travel allowances that form part of a particular contract must be included within the price agreed for the job. The point here is that although we may both use a daily rate for labour / food / transport to calculate and establish a contract value it is up to you to quote a single figure to us to complete the services that we have detailed. Contracts will be awarded on a project specific basis and will not take the form of a â€œDaily rate x number of daysâ€ basis.
PURCHASE ORDERS AND INVOICING
â€¢ We will issue you with a purchase order which will detail the works you have been contracted for, it is essential that you quote this purchase order number clearly on your invoice. It is recommended that you use the wording that appears on the Purchase Order for your invoice. Whilst we currently accept invoices without purchase orders the processing time increases significantly if a purchase order number is not quoted.
â€¢ Another indicator of self-employed status is that you act like a business and therefore have a letterhead and provide printed invoices; we will be unable to accept hand written or incorrectly submitted invoices.
â€¢ To improve our invoice processing we would strongly encourage you to email your invoices to us using the following email address: firstname.lastname@example.org
â€¢ We require you to hold a minimum of Â£1,000,000 of Public Liability cover.
â€¢ We are required to hold up to date insurance certificates for all our subcontractors. We will be unable to award contracts to businesses whose current insurance details we do not hold.
â€¢ You may also wish to hold travel, medical, loss of earnings or other forms of insurance to protect yourself against some of the risks involved in your business.
â€¢ In order for you to drive company vehicles we require to hold a photo copy of your driving licence (both parts where appropriate).
â€¢ You will need to read the Visions Event Solu ons Transport Policy
â€¢ You will be required to sign a declaration of the policies read.
We wish to avoid the additional administrative burden of having to treat subcontractors as employees, in the same way as I would imagine subcontractors wish to continue providing services without tax & NI being deducted at source.
I would be very happy to discuss the situation with you individually. Please feel free to call me on the number below if I can be of any further assistance.