Self-employed inventory clerks or property report professionals can simply be described as individuals who work for themselves instead of working for an employer.
Self-employed clerks (as most are generally known) provide a variety of property inspection and reporting services to both businesses and individuals. Some also use intermediaries and operate as limited companies as they provide a greater level of legal protection.
Other property sector services include contractors such as builders, electricians, plumbers, carpenters, painters and decorators and plasterers, all of whom could potentially operate as limited companies.
Not all limited company clerks are truly self-employed
Whether or not you are a self-employed clerk depends on the contract you hold with the business to which you are providing services (the client) and the way that you work.
You are more likely to appear to be an employee of the client if you:
(a) work primarily for the same client
(b) work at the client’s address
(c) adhere to the client’s working guidelines
(d) are unable to send another employee in replacement of yourself, and
(e) would need the client’s agreement for you to source work from somewhere else
If you are in business as a property professional, for example, a property manager, or as an estate agent, then you will most likely need to contract work out to these types of limited company contractors on a regular basis to help maintain the properties that you are selling or letting.
If this is the case, then keep on reading because there are some very important points that you should know relating to the IR35 rules which have recently changed.
The IR35 rules are otherwise known as the off-payroll working rules
These rules are in place to make sure that people working in the same way as employees but via their own limited company as self-employed inventory clerks, pay roughly the same amount of Income Tax and National Insurance Contributions as those who are employed directly by their client.
The IR35 rules are there to stop tax avoidance and to stop organisations from hiring contractors through an intermediary such as their limited liability company as opposed to hiring them in the normal way through an employment contract.
The result of this is that they become employees in every sense of the word apart from legally.
Off-payroll working rules changed on 6th April 2021
If you are a medium or large organisation that is not a part of the public sector then as of 6th April 2021, you are considered as the client in this situation and you are therefore in charge of working out your limited company contractors employment status for tax for the services that they provide to you.
If the off-payroll working rules are relevant, then you need to give the limited company contractor a Status Determination Statement which will describe your reasoning.
An example of this would be where you are a medium or large property management company that is contracting out work to a self-employed clerk who is operating as a limited company.
If the medium or large organisation decides that the contract is within the off-payroll working rules, then the limited company contractor will be classed as an employee of the organisation and the organisation will have to withdraw Income Tax and National Insurance Contributions before they pay the limited company contractor.
Remember, it is likely that the limited company contractor will be classed as an employee if they:
(a) are working primarily for the organisation
(b) are working at the organisation’s address
(c) are adhering to the organisation’s working guidelines
(d) are unable to send another employee in replacement of themselve, and
(e) would need the organisation’s agreement for them to source work from somewhere else
If the limited company contractor is within the off-payroll working rules and is classed as an employee, then the financial effect of this is substantial.
It can reduce the limited company contractor’s take home pay by up to 25% which ultimately ends up costing them a huge amount of money in extra Income Tax and National Insurance Contributions.
The same can be said for the client organisation as they would have to pay employers’ National Insurance Contributions for the limited company contractor.
If you are a small organisation that is not part of the public sector, then the self-employed clerk as a limited company will still be responsible for dealing with their own income Tax and National Insurance Contributions.
Having said this, the limited company contractor is within their rights to ask for specific information as to the size of the organisation.
An example of a small organisation that is not part of the public sector would be a start-up property management company that only has a few employees.
The organisation must do so reasonably in deciding whether the off-payroll working rules are applicable. The organisation must make each decision on an individual basis as opposed to grouping all clerks as off-payroll workers just because one is not likely to be classed as an employee, for example.
The off-payroll working rules do not apply to people who are self-employed clerks in the traditional sense.
The self-employed inventory clerk, in this example, has their own business systems in place such as owning their own commercial property, has their own employees and works for various different organisations.
In this situation, the self-employed clerk will remain responsible for managing their own taxes via the Income Tax Self-Assessment regardless as to whether they are a limited company.
Getting the right advice
Working for yourself as a self-employed clerk can be a great way to address your work-life balance and since the pandemic, many have opted to change their focus and look for alternative ways to work both flexibly and independently.
This information is broad so, as with any tax or employee related queries, you should ensure that you get the right advice. This can include organisations, accountants and membership organisations such as Propertymark
The Government website is ideal as they set the standards with information and guidance is built around legislation and any legal requirements.
There are also a number of organisations that can help offer advice, often, free, or as part of their membership.