self employment information

							                                                           Directorate of Finance and Legal Services

       To:              Finance Administrators             Headington Campus Gipsy Lane Oxford OX3 0BP UK
                        Purchasers                          t. +44 (0)1865 483736 f. +44 (0)1865 483464
       From:            Tim Bolton, Deputy Director             tbolton@brookes.ac.uk
                                                                  www.brookes.ac.uk/finance
       Date:            May 2006
       cc:              Deans and Directors, Payroll Team, Purchasing Team


       Self-employed status confirmation

       Establishing the employment status of individuals can be a complex process affected by myriad
       personal circumstances. For this reason it is difficult for the University to determine an individual’s
       tax status, and we are dependent on assessment by Her Majesty’s Revenue and Customs
       (HMRC) to assist. However, HMRC will no longer provide assessments of an individual’s status in
       advance of employment or providing a service. Instead, they have provided guidance on
       establishing status through their website.

       The University is liable for Income Tax and National Insurance (NI) for an individual who is
Memo




       incorrectly paid without such deductions. It is therefore important that we have evidence that we
       are able to legitimately pay for services without deducting tax and NI. From 1 June 2006,
       therefore, we will require certain suppliers of services to provide us with a copy of the output from
       the HMRC website to confirm that they have been assessed as self-employed if they wish to be
       paid without deduction.            The appropriate link to the website is as follows:
       www.hmrc.gov.uk/calcs/esi.htm, then click on ‘conditions of use’ and accept these (if you’re happy
       to). You’ll then be taken through a series of questions, and this will result in an opinion being
       given on your employment status. If it confirms that you are self-employed, a copy of this will
       need to be supplied to payroll or purchasing departments, preferably by email, in line with the
       procedure below.

       Currently, there are two main groups of people to whom this can apply:

             1) Individuals who are paid through our payroll – i.e. those who are paid using one of our
                casual, specialist or hourly-paid lecturer forms who regard themselves as self-employed;
             2) Individual suppliers of services who issue us with an invoice (for which a purchase order
                should have been raised). These will be from the individual personally, i.e. where
                payment is requested to the individual not to a company and where no VAT is included.

       Those in category (1) will have tax and NI deducted as a default unless they have provided payroll
       with the self-employed status confirmation in advance of the payroll being run.

       Those in category (2) will also be paid through the payroll with deduction of tax and NI unless the
       School or Directorate have supplied the purchasing manager with the self-employed status
       confirmation as described above at the time they are set up as a supplier (i.e. the supplier has
       answered ‘yes’ to the question on whether they are self-employed). They will be paid gross
       through the Cedar system provided the status form has been received by us.




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By instituting these changes, we hope to ensure that suppliers are correctly treated from a tax and
NI perspective and that the University is not rendered liable to assessment of unpaid tax and
possible penalties. We would be grateful if you would pass this information to anyone you deal
with who falls into one of these categories so that they are aware of the reasons for these
requirements. If you, or they, have any further questions, please contact Lorraine Mills (x3739 –
for queries relating to individuals who are to be paid through payroll) or Nigel Bacon (x 3901 – for
queries relating to suppliers paid through Cedar).

Thank you for your assistance in addressing this difficult and complex area.




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