Income tax hiring out service workers

Peterdalkey

A friend has asked me to help them set up a home services business. Essentially it is in the personal services area and no products will be involved. A bit like a home cleaner agency but not actually in this area. The business will be in effect an agency which will generate the bookings, charge the customer and then pay the person actually delivering the service directly. The people delivering the service will not be employees but will be paid an hourly rate and some contribution to travelling expenses. The idea I have is to record the RSI number of each of these service providers and then keep records of all payments made to them. They are then responsible for reporting their earning to Revenue.

Can anyone tell me if this would be revenue compliant?
Perhaps somebody out there runs this kind of business model and would be prepared to share their experiences. PM me if you prefer.

Thanks a lot

Peter

dbran

Hi Peter

It would depend on the nature of the relationship as to whether the persons delivering the service would be classified as self employed or employees.

This itself will be based on the set up that up have with them. There are various factors which the revenue use for determining whether or not an employee relationship exists. If you do a search on revenue.ie you will find a comprehensive list of these factors.

If some of the providers are de facto employees then there is a requirement on the employer to operate PAYE on the payments and you may be penalised severely for not doing so.

Hope this helps

dbran.

Peterdalkey

Thanks dbran. I went through the revenue site on the section dealing with self-employed or employee determination. A real case of "on the one hand and on the other"!! I banged off a query to the local paye office customer service with more detail of the terms and conditions of engagement. The answer should be interesting.


cheers

Peter

The Apprentice

Ya Peter i cant say i have experience or know of anyone with this type of business model but i do remember from commercial law & Corporate law, the requirements to making sure that the "Workers" are indeed not your employees and only workers sourced for the job itself.

The business model is sound, as its been done before with many types of industries, similar also to a brokerage for insurance.
You are essentially the middle man providing a platform to migrate Customer To business. Just making sure the Model is quite explicit and transparent to both "worker" that he or she needs to take care of his own tax affairs etc as this is not your legal requirement and also your employers.

I cant remember the exact case but giving someone a car and other perks could essentially be an incentive for the employee to do your bidding with no verbal or written contract implied but again ruled in favour of the worker .. courts can be a different story case to case :S.
If you can distance yourself from them legally as your employees you should not have any revenue or legal employee issues..
Keep us posted on this one as there were lots of scenarios with from varying sectors that might pop up..

Best of luck with it anyway !