Small businesses warned over ?disguised employees?

Small businesses have been urged to consider using self-employed workers in order to save money but have been warned to avoid falling foul of HMRC rules.Unbiased.co.uk issued the advice alongside its Tax Action report, which estimates that small businesses could save as much as £2 billion in tax by utilising self-employed contractors. The savings come from National Insurance contributions, which differ depending on whether workers are engaged as employees or self-employed contractors.However, employers are warned to be careful of being accused of tax avoidance through using what are known as ‘disguised employees’. Unbiased.co.uk defines such workers as, “those leaving a company to become self-employed while effectively continuing to be employed on a more or less full-time basis by that company, for the sole purpose of reducing the company’s tax liabilities.”Karen Barrett, Chief Executive of unbiased.co.uk commented, “Our Small Business Tax Action Report reveals that by utilising self-employed workers better, SMEs could be saving tax payments but it also highlights that tax can be a bit of a minefield!”She added, “A professional adviser can help you to understand your business’s tax liabilities, make sure you are using any tax breaks available to you and make sure you are not crossing the line into tax evasion.”

http://www.50percenttax.co.uk/index/2012/8/6/small-businesses-warned-over-disguised-employees.html