Clarification of initial post
This is a re-post from the thread started on the flying instructor forum, with the following additional clarification - HMRC are taking a case against Sherburn to the Special Commissioners in London. A decision will be made as to whether instructors at Sherburn are employed or self employed. The outcome will create a precedent which can be applied then to other clubs/schools and any underpaid tax and NI backdated a number of years. My original post:
Why are "self employed" instructors not concerned about this?? If HMRC win against Sherburn it will create a dangerous precedent. In the current economic climate, I can't see Flying Schools being able to pass on the costs of Employers NI to customers without there being a reduction in overall demand for flying training.
Therefore if overall income to Schools is unlikely to grow a newly defined "employed" instructor can't earn any more. In fact they might earn 12% less to cover the School having to pay Employers NI. So the same pot of earnings we get now is redefined to cover normal pay, holiday pay, sickness pay etc etc.
Perhaps more importantly - I like to manage my own tax affairs. I prefer to deduct my business associated expenses prior to paying tax, and do not want to be in a situation where HMRC can deduct PAYE/NI at source on gross pay and I have to fight to get it back retrospectively.
If HMRC win and other schools are challenged, I'm not sure I can afford to instruct as I currently do because I'm sure it will mean I'm paid less and taxed more. Perhaps I shouldn't worry then, because if this forces good Clubs like Sherburn to decide they can't afford to run a school it will all be outside my control in any case.