HMRC guidelines for determining self employment

miss_eve

Senior Stylist
#21
This thread is great and infuriating at the same time. I've been self employed for almost 3 years and it is so annoying that these are just guidelines as the salons I've worked for self employed have all dictated to me what to wear and working hours... there have been days where I have been in the salon on my own with a few or no clients and not getting paid for it. I drive 18miles each way to get there so it costs me. I'm getting to the point of thinking it's time to move on. I'm trying to push my mobile service as I love the freedom I get from that. I literally can pick and choose my working hours. But then I think that working with other stylists with years of industry experience will help me to continuously improve which is also what I want... I guess I need to find the right salon for that
 

Haircutz

Super Moderator
Staff member
#22
HMRC will determine if you're employed or self employed based on your situation.

The guidelines are there to help salon owners and stylists understand how HMRC will view the most common arrangements that exist.

If you are self employed and feel that the salon owner is trying to treat you as an employee without the perks, give the owner a copy of the guidelines.

If HMRC did investigate your arrangement, any future staff they take on are likely to be checked out too so it's not in the salon's interests to get picked up by the HMRC radar in the first place.
 

Fabby

Active Member
#23
http://www.hmrc.gov.uk/manuals/vtaxpermanual/VTAXPER69100.htm.

VTAXPER69100 - Particular trades: Hairdressing:
Guidelines agreed with the National Federation of Hairdressers


[Important note: Not all of the guidelines have to be met in any given situation. They remain what they are called, guidelines. They are indicators of the type of relationship that exists and some (like employment status of the stylists; the agreement between the parties - whether spoken or written, and the way the money/takings are handled) will carry more weight than others. In any event, you should always read them in conjunction with the foregoing guidance on hairdressing, in particular VTAXPER68600.]

Intent and general principles

To establish a business relationship other than that of employer and employee with the intent by the parties concerned to control their own actions and destiny through observance of the following basic principles:

each party to have ultimate command and authority over all aspects of their respective business or enterprise, and to be readily identified as having such authority;
each party to be responsible for the finances of their respective business or enterprise, and to reap the rewards and losses arising therefrom;
neither party to be solely obligated to - or rely or depend upon - the decisions of the other.


Guidelines

These guidelines support the above and will be used as a means of interpreting the intentions and principles of the parties concerned against their established working practises and procedures. The Guidelines are not exclusive but are indicators of the type of relationship that exists.

1. Status
The independent contractor (the Contractor) within a salon should be self-employed. An employee cannot establish an independent business within the establishment of the employer.
The business or enterprise of the Contractor should be independent of, and separate to, that of the salon and:
maintain its own books and accounting records;
be responsible for its own taxation affairs, health and safety procedures;
attend to its own insurance requirements, including public liability insurance;
be capable of suffering losses (negative profit) as well as enjoying profits;
have complete freedom to establish its own price structure and times of opening (including closure for holidays);
purchase consumables and products from any source, and sell any product range;
be able to compete openly for clients both inside and outside the salon, and to accept or reject clients at will;
be free to appoint locum tenens as the need arises;
be free of restrictions about the sale, disposal or relocation of the business;
display a notice giving the name of the Contractor and address at which documents may be served as required by Section 4 of the Business Names Act 1985;
respond to actions brought against it by third parties;
have its own stationary for business letters, written orders, invoices and receipts.

2. Access
Ideally, there would be separate access to that part of the salon in which the business of the Contractor is situated.
The Contractor to have access to their business at all times and have the ability to be open for custom at any time of their choice.

3. Clients
The clients should be in direct contract with the Contractor and be fully aware of this fact.
Complaints and claims from clients of the Contractor should be directed to the Contractor and not the salon.
Separate appointments (where applicable) should be maintained by or for the Contractor.
Casual clients entering the salon should themselves choose whether to patronise the Contractor or salon, and should have sufficient information to make such a choice based on:
the name(s) and possibly portraits, displayed in the reception area;
an identifiable list of specialities and price lists displayed in the reception area for each Contractor;
the times to wait before receiving attention.
The details, records, and addresses of clients who receive attention from the Contractor to be the property of the Contractor.

4. Money
The money received from clients attended by the Contractor to be the property of the Contractor, whether or not it is taken centrally.
Money collected centrally should either be handed over to the Contractor or paid into an account held in the name of the Contractor.
Money held for and on behalf of the Contractor, and the salon holding such funds should account to the Contractor for those funds.

5. Salon environment
The salon should not exercise control over the Contractor, or impose upon the Contractor codes or standards relating to hygiene or behaviour unless applied equally against all parties with observance measured by an independent authority or peer pressure. Safety regulations imposed on the Contractor by the salon should be no more than that required to comply with current legislation.
The Contractor to be responsible for the conduct, appearance and presentation of the Contractor’s enterprise, and in particular for behaviour, hygiene and safety matters relating to, or arising from, the Contractor’s activities.
There should be clear agreements in respect of services provided by the salon including:
the provision of telephone, heat, light and water;
available accommodation for clients;
reception, appointment booking and cash handling facilities;
use of salon personnel for specific duties and the control and discipline arrangements for such personnel;
use and availability of furniture, fittings and equipment;
laundry services;
marketing and promotion of hairdressing services;
cleaning and washing of floors and equipment;
access and security;
the amount to be paid by way of rent for use of space;
the amount to be paid for use of services, cleaning and maintenance of communal areas or how such charge is to be calculated.

6. Agreement
There should be a clear agreement in writing between the salon and the Contractor that accurately reflects actual working practice.
There should be a clear statement in respect of the term of the agreement, and the obligations and responsibilities of the parties on termination, notice required on termination and where that notice is to be served.
That VAT is to be levied (when applicable) on the charge paid by the Contractor for the services provided by the salon.
The Contractor is responsible for insuring the enterprise against public and product liabilities, losses that could arise as a result of theft, fire, storm, accidental damage etc, and statutory cover in respect of staff retained by the enterprise.
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Definition
Independent Contractor - a self employed person who provides an independent hairdressing and/or beauty therapy service to the general public from within a salon owned and operated by another person or company.


Edited: to add ACAS helpline number: 0300 123 1100
If i am an full time employee, but i rent a chair part time in the same salon and am treated as a chair renter as a chair renter with my own bookwork, own products, colours etc, is that allowed?
 

Haircutz

Super Moderator
Staff member
#24
Interesting question, but not sure how that would work in practice?
 

Fabby

Active Member
#25
Interesting question, but not sure how that would work in practice?
5 days a week I am a full time stylist but more of a colourist preforming traditional and modern dressing techniques. One day a week I work as a devacurl trained stylist using different methods entirely and breaking all of the ‘rules’ of hairdressing, it’s a different clientele alltogether
 

#26
Are you Self Employed?

http://www.hmrc.gov.uk/manuals/vtaxpermanual/VTAXPER69100.htm.

HMRC GUIDELINES - UPDATED.

VTAXPER69100 - Particular trades: Hairdressing: Guidelines agreed with the National Federation of Hairdressers

[Important note: Not all of the guidelines have to be met in any given situation. They remain what they are called, guidelines. They are indicators of the type of relationship that exists and some (like employment status of the stylists; the agreement between the parties - whether spoken or written, and the way the money/takings are handled) will carry more weight than others. In any event, you should always read them in conjunction with the foregoing guidance on hairdressing, in particular VTAXPER68600 (https://www.gov.uk/hmrc-internal-manuals/vat-taxable-person/vtaxper68600).]


Intent and general principles

To establish a business relationship other than that of employer and employee with the intent by the parties concerned to control their own actions and destiny through observance of the following basic principles:

1. each party to have ultimate command and authority over all aspects of their respective business or
enterprise, and to be readily identified as having such authority;
2. each party to be responsible for the finances of their respective business or enterprise, and to reap the
rewards and losses arising therefrom;
3. neither party to be solely obligated to - or rely or depend upon - the decisions of the other.

Guidelines

These guidelines support the above and will be used as a means of interpreting the intentions and principles of the parties concerned against their established working practises and procedures.
The Guidelines are not exclusive but are indicators of the type of relationship that exists.


1 Status
1.
The independent contractor (the Contractor) within a salon should be self-employed.
An employee cannot establish an independent business within the establishment of the employer.
2. The business or enterprise of the Contractor should be independent of, and separate to, that of the salon and:

1. maintain its own books and accounting records;
2. be responsible for its own taxation affairs, health and safety procedures;
3. attend to its own insurance requirements, including public liability insurance;
4. be capable of suffering losses (negative profit) as well as enjoying profits;
5. have complete freedom to establish its own price structure and times of opening (including closure for holidays);
6. purchase consumables and products from any source, and sell any product range;
7. be able to compete openly for clients both inside and outside the salon, and to accept or reject clients at will;
8. be free to appoint locum tenens as the need arises;
9. be free of restrictions about the sale, disposal or relocation of the business;
10. display a notice giving the name of the Contractor and address at which documents may be served as required by Section 4 of the Business Names Act 1985;
11. respond to actions brought against it by third parties;
12. have its own stationary for business letters, written orders, invoices and receipts.


2 Access

1. Ideally, there would be separate access to that part of the salon in which the business of the
Contractor is situated.
2. The Contractor to have access to their business at all times and have the ability to be open for custom
at any time of their choice.


3 Clients

1. The clients should be in direct contract with the Contractor and be fully aware of this fact.
2. Complaints and claims from clients of the Contractor should be directed to the Contractor and not the salon.
3. Separate appointments (where applicable) should be maintained by or for the Contractor.
4. Casual clients entering the salon should themselves choose whether to patronise the Contractor or salon, and should have sufficient information to make such a choice based on:
1. the name(s) and possibly portraits, displayed in the reception area;
2. an identifiable list of specialities and price lists displayed in the reception area for each Contractor;
3. the times to wait before receiving attention.

The details, records, and addresses of clients who receive attention from the Contractor to be the
property of the Contractor.


4 Money

1. The money received from clients attended by the Contractor to be the property of the Contractor,
whether or not it is taken centrally.
2. Money collected centrally should either be handed over to the Contractor or paid into an account held in the name of the Contractor.
3. Money held for and on behalf of the Contractor, and the salon holding such funds should account tothe Contractor for those funds.


5 Salon environment

1. The salon should not exercise control over the Contractor, or impose upon the Contractor codes or standards relating to hygiene or behaviour unless applied equally against all parties with observance measured by an independent authority or peer pressure. Safety regulations imposed on the Contractor by the salon should be no more than that required to comply with current legislation.
2. The Contractor to be responsible for the conduct, appearance and presentation of the Contractor’s enterprise, and in particular for behaviour, hygiene and safety matters relating to, or arising from, the Contractor’s activities.
3. There should be clear agreements in respect of services provided by the salon including:
1. the provision of telephone, heat, light and water;
2. available accommodation for clients;
3. reception, appointment booking and cash handling facilities;
4. use of salon personnel for specific duties and the control and discipline arrangements for such personnel;
5. use and availability of furniture, fittings and equipment;
6. laundry services;
7. marketing and promotion of hairdressing services;
8. cleaning and washing of floors and equipment;
9. access and security;
10. the amount to be paid by way of rent for use of space;
11 . the amount to be paid for use of services, cleaning and maintenance of communal areas or how such
charge is to be calculated.


6 Agreement

1. There should be a clear agreement in writing between the salon and the Contractor that accurately reflects actual working practice.
2. There should be a clear statement in respect of the term of the agreement, and the obligations and responsibilities of the parties on termination, notice required on termination and where that notice is to be served.
3. That VAT is to be levied (when applicable) on the charge paid by the Contractor for the services
provided by the salon.
4. The Contractor is responsible for insuring the enterprise against public and product liabilities, losses that could arise as a result of theft, fire, storm, accidental damage etc, and statutory cover in respect of staff retained by the enterprise.

Definition Independent Contractor - a self employed person who provides an independent hairdressing and/or beauty therapy service to the general public from within a salon owned and operated by another person or company.



Edited: to add ACAS helpline number: 0300 123 1100

Updated: March 2018
That’s so so helpful thank you
 
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