Payment for work question...

KyleS1

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Hypothetically speaking, if someone had a business and got a contract to do some work, but they got someone else in to do that work, who didn't have their own business, how would the person who did the work invoice for it, and handle the payment?
This would be a hypothetical one time arrangement.
 
If it was me, I would write a letter (not an email), asking for payment (EDIT to add) in either cash or cheque, for said job. Hand this letter to the middle company. I can't see it needs to be any more than that.
 
You don't need a company to issue an invoice. I did some freelance work a few years back for a big company - just a few weeks - just gave them an invoice and got paid. You have to register with HMRC that you are a sole trader or something so you don't get fined, but that's about it.
 
So how would the tax be calculated?
What are the chances that a one off payment would be found out?
 
Unless it's a very large payment.....extremely unlikely to be noticed in my opinion.
 
So how would the tax be calculated?
You'd declare it as additional income & pay tax at your normal rate, unless it takes you over the threshold.
What are the chances that a one off payment would be found out?
It will likely be recorded as an expense in the books of the company. If they get audited it could come to light.

Personally I never take risks with HMRC as once they're on your case you have a friend for life...
 
The person doing the work has no company, so no tax returns or forms. Payment for a job done, cash in hand to a private individual, I can't see that needing any HMRC involvement.

Lets say I need a piano shifting, I ask one of you lot to give me a hand, for £50 to cover your time. One off. I don't need to set up as a Sole Trader.
 
The person doing the work has no company, so no tax returns or forms. Payment for a job done, cash in hand to a private individual, I can't see that needing any HMRC involvement.

Lets say I need a piano shifting, I ask one of you lot to give me a hand, for £50 to cover your time. One off. I don't need to set up as a Sole Trader.

This sounds more like a business than a few pints worth for a mate :)
 
Unless it's a very large payment.....extremely unlikely to be noticed in my opinion.
Hypothetically around £700.
You'd declare it as additional income & pay tax at your normal rate, unless it takes you over the threshold.
It will likely be recorded as an expense in the books of the company. If they get audited it could come to light.

Personally I never take risks with HMRC as once they're on your case you have a friend for life...
That seems to be the only way it would come back to this hypothetical person.
The person doing the work has no company, so no tax returns or forms. Payment for a job done, cash in hand to a private individual, I can't see that needing any HMRC involvement.
If paid cash, the business who took the contract would need to pay tax on the full amount of the contract cost, not just their share.
Lets say I need a piano shifting, I ask one of you lot to give me a hand, for £50 to cover your time. One off. I don't need to set up as a Sole Trader.
That is the opposite way around. The person giving you a hand is the one "invoicing" you for the help they are providing for shifting the piano.
 
Yes, I got the shifter and shiftee the wrong way round.
But it was a hypothetical question at that point. Now there is meat on the bone, it's nearly a grand.

But I would still do the same. I am not self employed. Yet if someone asked me to do some paid work as a one-off, there is no way I would even dream of setting my self up as a sole trader for that one-off job.

But I have no detailed knowledge of how HMRC works. If there is a cut-off limit for this type of work then it must be documented somewhere.
 
Yes, I got the shifter and shiftee the wrong way round.
But it was a hypothetical question at that point. Now there is meat on the bone, it's nearly a grand.

But I would still do the same. I am not self employed. Yet if someone asked me to do some paid work as a one-off, there is no way I would even dream of setting my self up as a sole trader for that one-off job.

But I have no detailed knowledge of how HMRC works. If there is a cut-off limit for this type of work then it must be documented somewhere.

You could just call them up for advice. However their catch all is to get you to file a self assesment tax return.

I doubt its much of an issue. Whilst technically its tax evasion I doubt anyone would come after you for £300 in tax . Plenty of people make that selling stuff at carboot sales.

Hell I get £600 a year in vouchers on my various credit cards . I'm not about to bother declaring that.
 
You could just call them up for advice. However their catch all is to get you to file a self assesment tax return.

I doubt its much of an issue. Whilst technically its tax evasion I doubt anyone would come after you for £300 in tax . Plenty of people make that selling stuff at carboot sales.

Hell I get £600 a year in vouchers on my various credit cards . I'm not about to bother declaring that.

Try owing them £300 on your self assessment and watch them 'not bother' :)

Cashback rewards don't attract tax - nor does sell your stuff at a car boot - unless you are running it as a business.

But if you are going to be requesting money from a firm for services rendered then you should be recording that paying your dues :)
 
You should, you're right. I was just hypothetically wondering the likelihood of getting chased. Seems a lot of bother for a one off payment.
 
I did some one-off work twice in the last year for £1k in total. The company gave me a form to complete and return, which was essentially an invoice. I got paid in full, and come next financial year I'll contact HMRC. Apparently when it's a one-off and won't be regular, they're quite happy to adjust your PAYE tax code to collect the tax rather than paying all at once.

This is assuming your 'friend' in the 'hypothetical situation' earns taxable income elsewhere.
 
Everything has a paper trail these days. Not worth the risk.
 

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