Historically, a number of sales and canvassing roles have been treated as self-employed and the individuals have been required to complete annual Self-Assessment tax returns.
These roles often operate on a commission only basis, so if services are not successfully provided, either by making a sale or arranging an appointment, no payment will be received.
Employment Status is dependent on the facts, so two quite similar roles may have a different employment status position depending on the specific circumstance of the role.
What to do Next
If workers are incorrectly treated as self-employed this can lead to a significant tax liability, National Insurance and potentially penalties.
HMRC are encouraging FENSA Approved Installers to carry out their own reviews of these roles in their organisation to make sure the positions of the roles are correct.
You may wish to seek advice from Employment Status specialists if there is any uncertainty. You can arrange a call with Jon Fox, HMRC Employment Duties Tax Specialist on 03000 564388 or email via email@example.com, to discuss this in more detail if that would be useful.
Please be aware that HMRC cannot discuss the specific organisations that they have looked at to date for confidentiality reasons, but they are happy to discuss our general findings and how they have been arrived at.
A lot of the indicators HMRC consider for Employment Status such as Mutuality of Obligation, control over the worker and the requirement for personal service are present for the Sales Representative role. HMRC would consider the role to be an integral one to an organisation.
However, there is a prospect of undertaking work and not being paid any commission, or commission’s being recovered in the event of a cancelled or altered job. This level of risk can be quite significant and is beyond what we would expect for an employment role, this is why we think self-employed is likely to be the correct treatment.
Sales Manager Roles
For the Sales Manager, the role often involves sales co-ordination services rather than direct selling by the worker, although selling can form part of the role from time to time. This is also an integral role within an organisation.
The level of financial risk here, while still present, is significantly reduced from that of a Sales Representative. The other Employment Status indicators are also likely to be in line with an employed role so we think employment will be the correct treatment.
As with the Sales Manager and Sales Representative many of the Employment Status indicators such as Mutuality of Obligation and the requirement for a personal service are present.
There is also control over the when and where the workers perform their services on occasion, but there is also the option for workers to work on their own without approval or supervision. This is inconsistent with an employment role.
Provision of Benefits
The provision of benefits usually only be available to an employee, such as a company vehicle or the use of an office at the company’s expense are indicators that point towards to employment. This has formed part of the opinion arrived at for the roles HMRC have considered.
HMRC Check Employment Status Tool
You can access the HMRC Check Employment Status Tool by clicking here, the tool can be used to give a view of a worker’s status. When completing this it is important to consider how the roles are actually carried out in practice and not just the contractual arrangements.
Provided the correct information is used to complete this HRMC will stand by the Employment Status position that is determined by the tool.
You can also read HMRC's ES-FS1 Employment Status Factsheet by clicking here.