Bizhack.net

The excellent Lawmate site (www.lawmate.co.uk) offers good advice for employers and employees where the boundaries between being an employee or self employed start to wear thin. It goes on to state:

The status as self- employed or employed will have ramifications on you and your company in terms of your rights and your tax liability. For example, a person who is self-employed will be able to claim expenses against tax and a company will have to pay for PAYE deductions and NICs for its employees. In many cases, your status will be clear, and the terms of the contract with your business should be the first place to look for clarification. In the event that you are uncertain of your legal status (and therefore your tax and statutory rights) here is a list of general guidelines which can assist you.
Factors which may imply Employment:

1) Control - the business decides your hours and your place of work. It does not assign a project to you and give you free reign.

2) Perception (of others) at the company may have a major part to play. If there is no noticeable difference between the way you work, and that of other employees, this could suggest employment.

3) Benefits - any benefit of any kind such as holiday or sick pay will point towards employment.

4) Mutuality of obligation - in relation to a contract of service, is generally taken to mean an obligation on the employer’s part to provide work and an obligation on the employee’s part to perform it.

5) Time periods - The likelihood of being regarded as an employee will increase as time progresses. This will especially be the case where you are subject to a fixed number of hours in a week.

6) Fixed wage.

Factors which may imply Self-Employment:

1) Non-exclusive service - You have the right to take on work from other businesses.

2) Substitution - If you are allowed to sub-contract your work to a third party.

3) Financial Risk - If you have to use your own equipment and pay for your own training/courses or you are liable for any costs if your project overruns.

Ultimately, courts will look at the overall effect of the relationship between the individual and the business, and will not balance the number of factors in favour for against factors against. In the cases where the evidence is fairly balanced, the courts are likely to place emphasis on the intention of the parties concerned.

For any further advise, particularly in relation to your tax liability, you should contact HM Revenue and Customs (http://www.hmrc.gov.uk/menus/contactus.shtml)