"employing" a sub contractor

[GasmanxxxR1]

The work load for me is picking up with my own installations. Also I take installation work from utility companies and a big ish local firm.

A long term friend is a journeyman plumber and I have suggested to him that he becomes a sub contractor to me. The idea is we work together most days so we can get through, in theory, double the work load.

He is not GS registered and its my contacts that are bringing in the work. My mate is suggesting a 60/40 split of the money in my favour. He is a good installer with a wider knowledge of the plumbing industry and he has some contacts that could bring in different types of work.

I have worked with him in the past and we get on well, we have known each other for 20 years.

I have looked at HMRC website and think I can satisfy that he IS NOT an employee but a sub contractor.

What do you think I should do? Has anyone been in a similar position? Im looking for opinions, suggestions and wise council.

As ever thanks for your input guys

 

[cr0ft]

I think the acid test HMRC use to determine if he is an employee is does he do work exclusively for you or does he work for someone else?

Personally I wouldn't want to work with a mate, I really like to keep work and friendships/family totally separate but what works for me may not work for someone else!

Glad to heard you are busy though!

 

[village idiot]

Don't know much about sub-contracting. My only interest is in the payment split (60-40). That is considered reasonable except .........
You will be bringing in all the work, so need to be compensated for that by getting more, fact. But, if (as you say), he is more experienced and in my opinion, will do more, I would consider giving it a 50:50 split. Just my view.
Except it is a case where you're generating all the work, and bearing all the responsibility should anything goes wrong. In that case, then a 60-40 split is generous

 

[Millsy 82]

I wouldn't split it 60/40! You wouldn't turn around to bg and say I will sub to you and you will give me 40% of the profit! They would tell you to do one!

You are the one getting the work, going out to price the work, ordering parts, dealing with the customer, going back if there are any faults in yours or HIS work, waiting for payment (is he going to turn around and say "oh you haven't been paid don't worry about paying me!" I doubt that very much!)

40% the flaming cheek of some people!

 

[Millsy 82]

Personally I wouldn't want to work with a mate, I really like to keep work and friendships/family totally separate but what works for me may not work for someone else!

I worked for a "mate" once he took the P massively. From then on I would never work for a mate nor would I employ/ work with one.

 

[Ray Stafford]

Usually the definition of subcontracting involves the principle of substitution. IE, instead of turning up for work himself, he should be able to send a suitably qualified engineer in his place.

If that is not acceptable, and you require him PERSONALLY to turn up, then you have a "contract of personal service", or in every-day speak, "an employee". You will have the obligations to pay employers NI to HMRC and will be treated by other regulatory bodies as employer/employee, regardless of what you and he agree between you.

 

[GasmanxxxR1]

Seems I have to look at the 60/40 split. As I will be dealing with all the money and invoicing I can tip things into my favour. We are giving it a trial for 3 months to see how we go.

He is very open and honest and is willing to give and take. He knows if we dont work/perform we both dont get paid. He has been self employed before.

I know about the thing of working with friends, but it has the advantage of that I know him, hope to trust him and know that is workmanship is par with mine. So it has advantages and disadvantages. I a know his downsides so I will have to manage them, thats what we do in life though right?

The worst case scenario is that I go back to working on my own and I might loose his friendship. There is no investment of money from me.

 

[GasmanxxxR1]

Don't know much about sub-contracting. My only interest is in the payment split (60-40). That is considered reasonable except .........
You will be bringing in all the work, so need to be compensated for that by getting more, fact. But, if (as you say), he is more experienced and in my opinion, will do more, I would consider giving it a 50:50 split. Just my view.
Except it is a case where you're generating all the work, and bearing all the responsibility should anything goes wrong. In that case, then a 60-40 split is generous

He isnt GS registered and its mostly gas work we will be doing. His expertise is wide and varying in plumbing ie commercial, new build, plant rooms contract maintainence etc

 

[willing2learn]

I agree with Millsy, the split needs to be much greater in your favour, unless he's running the business with you, invoicing, pricing, return visits etc etc.

 

[GasmanxxxR1]

Just picking up from what Ray and Croft have said regards HMRC. In the real world they must know this happens. I know many GSR, electricians and builders who exclusivly work for big companies on a sub contract basis. They do no work from any where else. On a practical level it would be unacceptable to send a substitute without massive prior arrangement and I have never seen it happen.

I know where both Ray and Croft are coming from and believe me I have mulled it over. There is a list of yes or no questions on HMRC as to whether some one is an employee or not and on paper I can honestly answer that he wont be an employee, but on a day to day basis it might appear he is close to being my employee.

Loving all your help on this please keep it coming.