Freelancers' Questions: Should I accept emails as being my contract?
Freelancer’s Question: I quit my 9-to-5 creative
business role only for the company to ask me to stay on for another few months
after my official leave date!
I agreed to be hired as a freelancer -- as a sole trader -- but after asking for a contract, they said that an email would suffice. But the email is not from HR; it’s from the hiring manager and just says the day rate, number of days to be worked and the start date.
Should I accept this, as they say -- or produce a contract myself and ask them to sign it?
Expert’s Answer: An email may suffice -- but, of course, that entirely depends on what the email says -- and I have not seen it. So, my following comments need to be read with that fact firmly kept in mind!
You haven't actually used the expressions “self-employed” or “paid gross”, but I suspect these are what the question is all about.
To pay a sole trader gross, on the basis of an email containing nothing more than the information given, in circumstances where that sole trader had previously been an employee, is risky -- for them.
The risk is that the taxman would view your employment status as still “employed”, and that as a result, your client would get a bill for the tax they should have deducted from your income. But, as I say, this is their risk, not yours -- it is their door on which the taxman would come knocking.
Some arrangements, similar-sounding to yours, can fall foul of IR35. But IR35 only applies where there is an intermediary -- generally, this would be a company owned by the contractor -- in the middle of the contract chain. It is not a concern for a sole trader working direct for a client.
What you would need to do is to register with HMRC as having commenced self-employment; and then do accounts and a self-assessment return at the end of each tax year. Good luck!
The expert was Roger Sinclair, legal consultant at egos, a contracts advisory for
freelance and self-employed professionals.
7th May 2017