Hiring non-nationals as sole traders

B

Ballyman

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Hi
I'm starting up a company and I will be employing people to work for me. However, I don't want them to work for me directly and would prefer to hire "sole traders".
I would provide them with work and they would invoice me for any work they carried out for me. I would envisage hiring or to be correct, sub contracting a number of national and non nationals (who are members of the EU) so I presume there would be no issue with this same as there wouldn't be with an Irish person??
Is it as simple as this?? I can't imagine it is and there has to be millions of reasons why I can't do this but I really want it to work this way at the beginning as my capital would be quite low and I can't afford to hire/pay someone to do wages/tax for me so I thought this would be an easy way round it by letting them do their tax themselves.
I would only hope to do this for the first six months, pending it being successful of course before I could revert to employing people as PAYE workers.
Can non-nationals, who are members of the EU, such as Pole's etc. apply to become Sole Traders in Ireland??
Anyway, thanks for any help you can provide me with.
 
You do not say what industry your business is in, but in general you stand a strong chance of big problems with the Revenue if you attempt this in relation to Irish or Non-Irish workers without following all appropriate procedures.

This area can be complex and it is essential that you get professional advice on all aspects before proceeding.
 
ps If I had known that you had duplicated this post on another thread I would not have replied to your query.
 
I wasn't sure which was the correct section for it!

What kind of problems would I come across? I can't see what is wrong with this as long as I pay the correect tax on my earnings.

So it wouldn't matter whether they were irish or non national?? They would be treated the same for tax purposes??
 
Hi Ballyman,

It sounds like a tax evasion scheme. The reason that companies hiring people on contract insist that the contractor is/has a limited company is to avoid this situation. You are de facto employing people to work for you. As an employer you have a legal responsibility to act as a tax-collecting agent for the government and you have a duty of care to your employees. The Revenue commissioner’s office takes a dim view of what you are proposing and rightly so in my opinion. If they decide that you are employing them as contractors in order to avoid paying employers PRSI, which is what you are doing, they will pursue you for tax evasion. The moral questions around taking advantage of immigrants in this manner are, for me, a bigger reason not to do what you are proposing.

If you need cash flow then get on to you local county enterprise board or you bank.
 
It's not taking advantage of immigrants that is the issue here. In the business I'm in, which is mainly temporary work, it is 99% non national people I am getting requests for work from. I am not trying to exploit anybody, believe me but I must play the hand I'm dealt.

Also, I am not trying to evade tax. I'm simply looking for the cheapest and easiest way to have sub contractors working for me while I pay my correct share of tax. I have no issue with paying my correct share of tax whatsoever.

So, me as a limited company, can I subcontract work I receive out to Sole Traders to be completed??
 
If you were in the construction industry (I think maybe also forestry) you could take on sub contractors paying them on a C45. The revenue didnt take a dim view of it. However they have published guidelines so that you can determine whether you have sub contractors or employees. these guidelines can be found on the revenue.ie website.
You will need professional advice on how best to run your business.
 
It's not up to you to decide whether the people are self employed or not. It's up to Scope Section of the Dept of Social Welfare.

If you take these people on as s/e and they are later deemed by Scope Section to be employees then you will become liable for all the PRSI that should have been paid, both the Employers and the Employees share.

This leaflet will point you in the right direction
http://www.welfare.ie/publications/sw106.html

I cannot find the particular section at the moment but as far as I'm aware if the Department pays unemployment to these people and you have not been paying PRSI for them, or paying the wrong class of PRSI, then you are also liable to the Department for any benefit paid to these employees.


Murt
 
Revenue have also produced a guide for determining the employment status of an individual [broken link removed].

As a generalisation, if someone looks like an employee i.e. how the relationship between you and them operates in reality, they will be considered an employee even if you have written contracts stating that they are self employed contractors (Henry Denny & Sons (Ireland) Limited t/a Kerry Foods -v- The Minister for Social Welfare [1998] IR 34 is the definiing case in this). That means that employment legislation will apply and all of the resulting rights for the employee and obligations on the employer will fall to you, as well as the revenue issues mentioned above.
 
Thanks for your help.

My scenario is a little different I think. As an example, I will use a recruitment consultancy. If Company A rings me, looking for 4 people for 3 weeks labour work on their site. I provide the 4 people to them, but they work as sole traders. As the work would be different all the time and in essence only temporary. Essentially I would be a middle man. The sole traders invoice me for the work they carried out and then I invoice company A.

What I am doing is similar. I wouldn't actually have employees only I would be providing my expertise and temporary staff if needed. Could I not just subcontract the sole traders when needed this way?? I won't have permanent staff nor do I need them as everything would be temporary.
 
Much easier for you if you can provide this service on a referral fee basis - the hiring company pays you for finding the workers. You won't have to deal with paying the workers and a lot less hassle - and fewer potential cash flow problems - all round.
 
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