Pilots self-employed for tax purposes.
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Pilots self-employed for tax purposes.
Over on Centre Court the FR Union or Nots are in yet another tie breaker. However, one topic that has recently appeared is reference to pilots on contract to Brookfield being registered as self-employed for tax purposes and thence `softening the blow`.
You may have noticed that I was approached by Brookfield and was hopeful of a contract with FR. Nothing came of it, but during that short-lived and clearly misguided period of optimism, I spoke to my accountant on this subject.
He was, frankly, sceptical about the chance of success. In his opinion, and that of the taxman he thought, pilots are employed to fly aeroplanes by `employers` be they the airline or an agency! However, we left it that I would get a job first.
There must be people out there in this situation and I would welcome any feedback on this. Obviously if you are `bending` or `dodgeing` then please dont put yourselves at risk! Perhaps it only works if you pay tax outside UK e.g. Ireland.
I have my fingers crossed for a job in UK that would be based in UK but for an outside agency, and the pay would benefit from some `blow softening` of this type.
Please..... info, advice, experience, no insults or slanging matches. Take that to the Centre Court!!!
You may have noticed that I was approached by Brookfield and was hopeful of a contract with FR. Nothing came of it, but during that short-lived and clearly misguided period of optimism, I spoke to my accountant on this subject.
He was, frankly, sceptical about the chance of success. In his opinion, and that of the taxman he thought, pilots are employed to fly aeroplanes by `employers` be they the airline or an agency! However, we left it that I would get a job first.
There must be people out there in this situation and I would welcome any feedback on this. Obviously if you are `bending` or `dodgeing` then please dont put yourselves at risk! Perhaps it only works if you pay tax outside UK e.g. Ireland.
I have my fingers crossed for a job in UK that would be based in UK but for an outside agency, and the pay would benefit from some `blow softening` of this type.
Please..... info, advice, experience, no insults or slanging matches. Take that to the Centre Court!!!
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Hope this helps..
I flew exec-jets in the early 90s .. on a self emplyed basis and based in the West Midlands.
Within a few months of starting (and after having registered with HM as being self-employed)... I was notified that if all of my income came from one firm (it did!) I could not continue on a self-employed basis.
Further investigations by my accountant confirmed this.
Not that it mattered much because just afterwards I lost my Class 1 medical.
Although the old Inland revenue and Customs and Excise now operate as a single agency (HMRC) I believe that the "single income" criteria still applies.
Good luck anyway. BM
Within a few months of starting (and after having registered with HM as being self-employed)... I was notified that if all of my income came from one firm (it did!) I could not continue on a self-employed basis.
Further investigations by my accountant confirmed this.
Not that it mattered much because just afterwards I lost my Class 1 medical.
Although the old Inland revenue and Customs and Excise now operate as a single agency (HMRC) I believe that the "single income" criteria still applies.
Good luck anyway. BM
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My experience was almost exactly that of BoingMEL. I had one (main) employer with some occasional work on the side flying scenic trips out of Duxford. Got away with it the first year courtesy of a very good accountant but it was made very clear to me that I'd just scraped by because of the second income. I was told in no uncertain terms that the next year I could expect a thorough investigation. Decided it wasn't worth it, dropped the fun flying and went PAYE. Even then they put me on self assessment where I've been for the last eight years and always get questioned. Nobody bears a grudge like the taxman.
I don't care what anyone says, those dodging tax on the basis that they're self employed (but only freelancing for one operator
) are in for a nasty shock.
I don't care what anyone says, those dodging tax on the basis that they're self employed (but only freelancing for one operator
) are in for a nasty shock.
Ramasseur des pommes
In my life before flying, I was a musician doing the same show every day for the same producer (for years). All theatre musicians are paid on a self-employed basis using BACS by the same producer on a weekly basis. The musician is responsible for paying their own tax liability at the end of the year. I can't see why flying should be different. In theatre, a "fixer" is the orchestral contractor, but they aren't allowed to hold any funds, other than their own commission.
I wonder if accountants are aware of this and if it's worth arguing the toss?
Applemacster
I wonder if accountants are aware of this and if it's worth arguing the toss?
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I can't see why one would be "dodging tax" on the basis of being self employed. If you complete a self-assessment return and declare all the income you have invoiced out to an airline then the tax man is getting what he is due surely? Happy to be corrected on this, bar the obvious reason of those who choose to misdeclare......
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tax man is getting what he is due surely
From DirectGov website:-
Whether you're employed or self-employed depends on the terms and conditions of your work. It's important to know your employment status because it affects employment and benefit rights, and how you pay tax and National Insurance.
Basic checks to help you decide
You can usually work out your employment status by asking a few straightforward questions.
You are probably self-employed if you:
run your own business and take responsibility for its success or failure
have several customers at the same time
can decide how, when and where you do your work
are free to hire other people to do the work for you or help you at your own expense
provide the main items of equipment to do your work
You are probably employed if you:
have to do the work yourself
work for one person at a time, who is in charge of what you do and takes on the risks of the business
can be told how, when and where you do your work
have to work a set amount of hours
are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed
You can also be employed and self-employed at the same time, perhaps by working for an employer during the day and running your own business in the evenings. Think about each contract separately - you may find that you are self-employed for one but employed for another.
If you're unsure, you should ask to talk to a member of the Employment Support Team at your Tax Office. There's no legal definition of employment or self-employment, so if there's a doubt about someone's status the decision is made by referring to previous judgments - known as 'case law'.
Whether you are employed of self-employed depends upon the facts of your working arrangements, what your contract says or a combination of both.
Basic checks to help you decide
You can usually work out your employment status by asking a few straightforward questions.
You are probably self-employed if you:
run your own business and take responsibility for its success or failure
have several customers at the same time
can decide how, when and where you do your work
are free to hire other people to do the work for you or help you at your own expense
provide the main items of equipment to do your work
You are probably employed if you:
have to do the work yourself
work for one person at a time, who is in charge of what you do and takes on the risks of the business
can be told how, when and where you do your work
have to work a set amount of hours
are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed
You can also be employed and self-employed at the same time, perhaps by working for an employer during the day and running your own business in the evenings. Think about each contract separately - you may find that you are self-employed for one but employed for another.
If you're unsure, you should ask to talk to a member of the Employment Support Team at your Tax Office. There's no legal definition of employment or self-employment, so if there's a doubt about someone's status the decision is made by referring to previous judgments - known as 'case law'.
Whether you are employed of self-employed depends upon the facts of your working arrangements, what your contract says or a combination of both.
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Thanks Tocamack,
That seems pretty clear to me., so whats the score with those guys at FR?
You are probably self-employed if you:
run your own business and take responsibility for its success or failure
have several customers at the same time
can decide how, when and where you do your work
are free to hire other people to do the work for you or help you at your own expense
provide the main items of equipment to do your work
run your own business and take responsibility for its success or failure
have several customers at the same time
can decide how, when and where you do your work
are free to hire other people to do the work for you or help you at your own expense
provide the main items of equipment to do your work
That seems pretty clear to me., so whats the score with those guys at FR?
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The relevant legislation is referred to as IR35 and details can be found here
HM Revenue & Customs: IR35 - Countering Avoidance in the Provision of Personal Services
HM Revenue & Customs: IR35 - Countering Avoidance in the Provision of Personal Services
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And for those interested, the Tories are on record having stated that they will abolish IR35 if elected.
I am not a pilot, I'm a management consultant, but had cause to look at the situation very closely when I ran a UK business. I now live abroad and my company 'moved' to another jurisdiction, thus freeing me from this nonsense.
In my opinion, this was a vindictive piece of legislation, targeted mainly at the IT contractor community, unfortunately others get scoped in.
Here is a good place to start looking, if you are interested in how freelancers in the UK cope with IR35 PCG: the professional association supporting freelancers, contractors and consultants
I seem to remember reading on the Private Flying forum that the Sherburn Aero Club won a ruling recently against HMRC who were trying to claim that their instructors could not be considered to be self employed.
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Thanks Legal,
Tried to wade through that and now totally cross - hatched!!!!
That is pretty clear too.
Just emailed my accountant so watch this space.
In the meantime thanks to all and still waiting to hear from those referred to in the FR thread!!??
Tried to wade through that and now totally cross - hatched!!!!
Would you be an employee if you worked for your client directly and not through your company or partnership?
Just emailed my accountant so watch this space.
In the meantime thanks to all and still waiting to hear from those referred to in the FR thread!!??
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I think if you take the Brookfield contract literally, there is no way on God's Earth you could get away with being regarded as 'Self Employed'. However, I believe that by forcing a months' unpaid leave upon all BRK contractors, thats the magic loophole.
Any views?
WTSS
Any views?
WTSS
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In my own case (explained above) I had to demonstrate more than one stream of income to be deemed 'self-employed' so I'm inclined to ask.
1. How many, if any, Ryanair crew work for other 'clients'?
2. What would RYR's reaction be if they asked to do so? If they deem their crew to be self-employed they could hardly refuse, could they?
1. How many, if any, Ryanair crew work for other 'clients'?
2. What would RYR's reaction be if they asked to do so? If they deem their crew to be self-employed they could hardly refuse, could they?
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I may, and am from time to time, wrong, but, I believe that the Brookfield contract is exactly the same as Ryanair full-time contract in that it prohibits you from working for another company, QED ?
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From a legal point of view there is no argument, the pilot is under the control and direction of the airline. The airline provides the tools to carry out that job.
The case however is an example of the Inland Revenue taking a practical and commercial view of things. If the IR steps in and decides that a pilot must be a full time employee and not a contractor then Ryanair will employ them all. The result will be a loss of income to the IR. Ryanair as an Irish employer will deduct tax form the pilots salary and pay the tax in Ireland.
The IR looses out, The Irish tax office is in the same boat. If they go to Ryanair and decide that all the pilots have to be employees then ryaniar will make the pilots employees of brookfield. The Irish tax office looses out.
The Irish tax office at the highest level have made a policy decison to leave ryanair to continue employing contractors providing they ensure that each contractor is registered and paying tax.
The situation is as it is, there are tax planning opportunites available to any guy who is contracting to legally reduce his tax to a fraction of that which he would pay as an employee. he can do this without having to pay massive accountancy or tax adviser bills.
The case however is an example of the Inland Revenue taking a practical and commercial view of things. If the IR steps in and decides that a pilot must be a full time employee and not a contractor then Ryanair will employ them all. The result will be a loss of income to the IR. Ryanair as an Irish employer will deduct tax form the pilots salary and pay the tax in Ireland.
The IR looses out, The Irish tax office is in the same boat. If they go to Ryanair and decide that all the pilots have to be employees then ryaniar will make the pilots employees of brookfield. The Irish tax office looses out.
The Irish tax office at the highest level have made a policy decison to leave ryanair to continue employing contractors providing they ensure that each contractor is registered and paying tax.
The situation is as it is, there are tax planning opportunites available to any guy who is contracting to legally reduce his tax to a fraction of that which he would pay as an employee. he can do this without having to pay massive accountancy or tax adviser bills.
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From what I remember one of the key factors in IR35 is can you be replaced, i.e. if your run your own business, could you provide another member of staff to do your work, or is the job contingent on you doing the work? For an IT consultant it's possible to find someone with similar skills that you could theoretically substitue in to do your work. As an airline pilot in the UK, with all the hoops required to get a criminal record check, airside pass, sim checks etc etc I'd say the substitution is nigh on impossible.