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IR35: Freelance & Self employed Chef Guidance

sWhat is the intermediaries legislation?

The intermediaries legislation (or more commonly known as IR35) is a way in which the HMRC will target tax avoidance and ‘fake employees’ in the future.

The legislation will come into power in April 2020 for all private sector businesses & workers (This is already in place for the public sector) ,and will focus on relationships between workers and businesses.

Any worker found to be working under IR35 will be subject to higher taxation and restrictions on expenses for certain clients or businesses.

Here is a brief insight and breakdown of how to navigate through this new legislation. Please note: This article is for guidance only and should not be relied on as absolute law. Remember every persons working situation is different and the implications of IR35 will differ from each case.

What will determine whether I’m an employee or a sole trader with a individual client/business?

When the HMRC looks at workers and whether their an employee or not is how they are controlled. This includes;

– Is the worker in control of their working hours?

If someone is controlled on when they will work (including taking breaks, an the time they finish) it will be classed on the side of the employee.

Whereas a sole trader will have direct control of their hours including start/ finish times and breaks based on the ‘contract’ that is required to be completed (more on these ‘Contracts’ later

– Is the client in direct control of how the work/task is completed?

If the management instructs and directs exactly how a piece of work or task is to be completed and gives no control to the worker, then they are classed as Employed.

A sole trader on the other hand will be in direct control. They may be instructed on what is required of them, but they must be given complete freedom on how they are to complete the task.

What Sole traders must remember is they are liable for costs and must rectify any work which does not meet the clients expectations.

– Is the work regular/ Occasional/ One off?

If a worker is committed to over 30 hours a week on a constant basis for 1 client, they will likely be classed more as an employee.

If they only complete 1 days work over a month and do less than 28 days work a year for a single client, they are more likely classed as a sole trader.

If a worker only completes 1 days work throughout the whole year for a client, they will be classed as a sole trader.

(Exact number of days will vary dependant on the contract agreed by both parties)

– Is the worker able to provide cover in their absence?

If a worker is absent and can not provide any cover or substitution to complete the agreed contract, they will likely be classed as an Employee (dependant on the contract and type of work)

If a worker is absent but can readily supply cover or substitution to complete the contract, they will be classed as a sole trader.

– Can the worker pick their own working days and refuse work at will?

If a worker has any limitation on days of work for a contract, they are Employed :

“if you are working as a freelance chef in a kitchen and you are told, you’re working next Friday and you have little choice on the matter. You would be classed an employee by the HMRC”

If a worker has complete control and can refuse work as they wish, they would be classed as a sole trader.

So how does this affect chef related work?

The biggest problem for freelance and self employed chefs is that we tend to have very little control of working hours, breaks and how we complete our tasks.

What is also a big problem is the lack of contract based work as it relies on the consumer walking through the doors of the clients we are working with.

If you’re caught under this Legislation, the client will have a responsibility to pay you as an employee (thus deducting Tax & N.I contributions from your invoice).

What you will also find is your unable to claim expenses (or only a %) for the work you complete for the individual client

How to combat and avoid IR35?

Here are some (not all) key areas you need to identify and work on so you ensure you avoid falling into the IR35:

Control

Keeping control of how you perform your work is one of the big areas. If you are told constantly “we don’t do it like that” then you have a problem. The idea of a sole trader/ business is to provide a service to the client. It is not the clients place to instruct the worker how to complete the task, that should remain in the workers control.

The control of hours/ breaks. Will be harder, but not impossible. As these will fall under the ‘contract’ area of this article.

Contracts, Contracts, Contracts

If you’re completing one day, or one month. Make sure its done through a signed contract. Never complete work via verbal confirmation.

When writing up a contract, avoid words and terms which would normally be used in an employment contract such as “absence”, “overtime” and “holidays”.

Make sure when writing a contract it includes the exact outlines of your duties and the ‘end-result’ to complete the contract.

If possible, ensure you avoid including an extension of contract as this could cause a possible ‘employee’ scenario.

When writing the contract, ensure you include any start and finish times if required and ensure you complete the work based on the contract (never start earlier or finish later than these times. remember, you have to remain in control)

If your not sure how to write a contract. Contact your accountant who should be able to write one up for your (for a fee)

Work out the contract value/day rate. Not hourly rate.

Most freelance chefs will work on a hourly rate which could cause problems once IR35 comes into play.

A safer way would be to set a day rate or a total contract value (if services are required for a longer period of time then a contract with a total value would be more suitable)

It might also be worthwhile working out a half day rate for small jobs.

Maximise your number of clients

This will go without saying, look to work for as many different clients as you can, not just 1 or 2 clients.

Working for multiple clients over 1 month will show your more inclined to decide when you work and who for, which will work better in your favour as a sole-trader

Rotate your clients

When you’re working for a client on a regular basis, ensure you keep doing other work for different clients. Especially if you end up doing a full 48 hours for 1 client in a week.

Take a couple of weeks or even a month away from a client working elsewhere if you feel your becoming too regular at the clients business.

Ideally avoid working longer than 28 days (or 1 month) in one single calender year as a relief chef for 1 client.

Substitution ready

NB: This will be a defining subject in a lot of sole-traders case for IR35.

Substitution means having an additional means of completing the work either off site (if its office related) or by hiring out other contractors to complete the work on behalf of your business (or you).

You may need to have substitution in the event you become ill, your car breaks down, you need to take personal leave ect. Once you’ve signed the contract of services (or an agreement) you must comply with the terms set out including the dates of work and tasks to be completed.

When you use a 3rd party contractor to complete the contract on your behalf, you must pay the contractor from your business (not the client) and then receive the original amount from your client (you’re likely to make a loss if this happens)

To prepare for this instance, contacting other freelance chefs or sole traders with arrangements to cover each other in the event of illness or other absences can be a real boost against IR35. Also be sure to have any arrangements/agreements in writing ready for the HMRC.

Lastly, also keep records of any time you have used substitution to further boost your case of running as a sole trader.

Stay professional

When communicating with clients either for marketing or check-ups by email or text, remain completely professional and business minded using properly constructed sentences and language.

Avoid delving into personal matters and workplace gossip as these emails may be used if your case is ever taken into consideration for IR35. Also ensure each client receives fair treatment from your business. If you implement charges for late payment for one client, ensure every client is dealt the same hand and any other client that pays late receives the same charges.

What about freelancing through agencies?

Freelancing through agencies will follow mostly the same rules.

Agencies will have to keep track and maintain judgement on a workers role in a business.

If a worker is found to be working as a employee, it will be the agencies responsibility to inform the worker rather than the clients (whoever directly pays the worker, must decide on their employment status based on IR35)

*Please note: Although agencies will have to follow IR35, they are mostly controlled by the ‘Agency Workers Regulations – 2010’.  

Thats it for now. Please note this article will expand over the coming months as more research is completed into this matter and things become more clear.

For more information, Please contact brendon@bairelandservices.com  or call 07551 072741l

2018 The year of 5’s

Going back to February when things really got going for B.A.Ireland Services. I was consulting with a business in regards to opening their food operations and moving the business forward.

They had a small little cafe operation with very slow turnover, but had only achieved a 3 out of 5 which is slightly bizarre seeming they hadn’t opened for more than a week before they were inspected.

The audit read “little knowledge of safe practices. incomplete HACCP ect”. The normal and usual culprits in an inspection.

After some meetings with the client and a few tweaks to their food safety policy, the re-inspection process began.

The client had me go in every week or so and make sure everything was in order and running smoothly. Much to the chefs frustration.

Anyway some weeks past and the big day arrived. The officer arrived, announced they were here for a re-inspection and began their work.

Everything went perfectly. 0 points on each section (for those who don’t know, the lower the score, the better)

I received praise from the owner and a satisfied handshake from the chef. But best of all i was referred to 2 additional businesses and started work with these businesses.

Some time later…

Business is going well and i receive messages and emails from clients thanking  myself for the professional and effective service i deliver.

One client emailed over stating upon inspection, the officer said their documentation “was overkill”. Which to be fair i was chuffed about. If an environmental health officer thinks the documentation i implement for businesses is overkill, then I’m on the right track.

Then 4 weeks ago whilst participating in the relief freelance chef game, i stumble upon an old client who’s recent head chef had left and were due a re-inspection to claim ‘5/5’. A feet not achieved at this client in some time (years)

So i did the normal process of sit down, look through the environmental audit, and start ticking off the completed tasks. All in all it took me 2 weeks to get everything in order (and at the same time completing the relief work i was contracted out for).

The environmental health officer visited on the Monday and was “over the moon”, giving the client 5/5 for the first time in many years.

Part of my job satisfaction is the 5/5 food hygiene score a client receives. The rest of the satisfaction is knowing the client can keep things up to the high standards when I’m not around.

Though for this year of 2018, the satisfaction is 100% of all my clients has received 5/5.

Well done to every team and individual who helped achieved each businesses rating.

 

 

Acrylamide Regulation (EU) 2017/2156

Morning all.

A new month, a new regulation. This month, its Regulation (EU) no 2017/2156,  or the more commonly known Acrylamide.

See the source image

I know you probably don’t know Acrylamide that well, but don’t worry, it seems not a lot of people do either.

In a survey within the city I’m located, not one business out of the 100’s I contacted knew anything about acrylamide or the regulation due to come into force.

Even more concerning is through contact to the local enforcement agencies, not one of them knew about this regulation either. One actually referred me to the FSA who then referred me to trading standards. Who then referred me back to my local enforcement agency.

So if no one knows anything about it, should I really be prepared?

The answer in short is yes. Remember that ‘Ignorance of the law is no defence’. And above all, following the regulation could save lives and provide healthier meals for the consumer overall

So what is Acrylamide?

Acrylamide is a white odourless substance that is formed by amino acids and sugars… obviously these are just words for most chef’s and workers.See the source image

It basically occurs naturally in starch rich foods (including coffee beans) and can become harmful when cooked over 120’C for a prolonged period of time.

The main culprit is potatoes, but it does extend to other root vegetables and baked good that also contain starch. To reduce the risk of acrylamide in foods businesses can follow the FSA guidance in relation to this new Regulation.

Store raw potatoes out the fridge, an ideal temperature would be 6’C. cooked potatoes are fine to be stored in the fridge.

Read the instructions on products that pose a risk. Things like hash browns, fries, chips supplied to your business will have had to provide effective cooking methods with their products so that it meets the new regulations.

Go For Gold is the most simple rule. no longer are the days of overcooked roasts or dark coloured chips.

In theory it shouldn’t pose too much change for businesses. It can be as simple as the recent allergen changes we had to do. All it takes it the right preparation.

I did have a client who asked me about cooking chips in their small business:

“I work in a small kitchen with fryers that start at 130’C. How can I blanch and produce chips for my customer base which follows this regulation?”

As I said, its preparation. Other than blanching in the fryer at 130-145’C, you could blanch your chips in a pan of water. Granted this may create more work for you, but its important to adapt first rather than risking it waiting to see if you’ll be told off (or worse fined). If you have them, use your steamers to blanch the chips and if your fryer supports it, blanch at 100’C . If your still not sure, you could contact your local environmental agency food team for advice, or contact the FSA directly. Remember to find a solution rather than just identifying the problem itself.

This regulation comes into forces on Wednesday 11th April 2018.

 

Click here to visit ‘Steve pepper training associates’. You can find loads more information on  acrylamide and many other subjects.

 

 As well as information, Steve pepper offers a range of training courses, HACCP systems and other interesting factsheets to help you and your business move forward

I  can personally say the quality of training Steve gives you is of the highest grade. You’ll definitely be thankful you sat in Steve’s classroom rather than at some computer.

Information on all ‘Steve Pepper’s training associates’ training and course dates can be found here.  

“psst… and remember to mention my name when you book in with Steve”

 

 

 

You can find more information on this new regulation directly at the FSA website.