Ever thought it was strange that payroll and umbrella companies say you can’t pay subbies long-term, but then they do exactly that?
Odd, isn’t it?
What if we told you you don’t need a payroll or umbrella company to work with subbies long-term? You can pay them without going through a third party or upsetting HMRC.
It’s what all our clients are doing – and they are doing it with our insurance-backed guarantee. If HMRC ever questions the employment status of their subbies, we’ll handle the enquiry. And in the unlikely event HMRC wants to reclassify their subbies as employees, we’ll pay any backdated tax or NIC.
Sound too good to be true? We promise it’s not.
How payroll companies and umbrella companies do it
The first thing we need to clear up is the myth around how long you can work with your subbies.
There is no law specifying how long you can work with subcontractors.
Any rumours you’ve heard about only being able to work with subbies for 13 weeks at a time are bullshit.
And while we’re on the subject of bullshit, IR35 doesn’t apply to sole traders, it’s absolutely fine to pay your subbies by the hour, and you don’t have to pay subbies through a third party to work with them long-term.
It all comes down to contracts. Payroll and umbrella companies put themselves in the middle of the contractual chain between you and your subbies. You pay them, they pay your subbies, and they take a nice little fee from your subcontractors’ wage.
Well, guess what? You don’t need a third party in the middle of your contractual chain. You can have a contract directly between you and your subbies, then you just pay them yourself.
(And if you want to know how to do it, get your free copy of our book here.)
What makes HardHats different?
Before setting up HardHats, one of our directors, Ashley, spent a decade building a £100m a year payroll company.
At the time, he genuinely believed what he offered construction firms was the best solution. But slowly, it became apparent that not all firms wanted to hand over control of their payroll.
Ashley started to question why his firm was able to pay subbies long-term, but construction firms couldn’t. He realised they could.
He figured out the secret sauce payroll companies used – it all came down to the contracts.
Payroll companies had robust contracts with subbies to demonstrate to HMRC those subbies were genuinely self-employed.
What was stopping construction firms from cutting out the middleman and having watertight contracts between themselves and their subbies?
Well, not quite nothing. It mostly came down to a lack of knowledge on how HMRC defines employment status, what courts look at when determining whether someone is genuinely self-employed, and how to create contracts that accurately document the working relationship between contractor and subcontractor.
So Ashley went to work figuring out how he could make this available to construction firms who wanted to work with subbies long-term without handing over their payroll.
And essentially, that is what HardHats is all about.
We create bespoke contracts between you and your subbies that offer you better protection than you’d get from a payroll company.
Why are our contracts better?
The contracts payroll companies use have been designed to protect them. The contracts we create for you are designed to protect you (and your subbies).
They aren’t off-the-shelf templates. They are comprehensive agreements that outline how and why you work with your subcontractors the way you do. They are based on the working relationship you have with your subbies, not just filled with generic clauses that don’t match up to reality.
And the reason we document your true working relationship so carefully is because HMRC and the courts no longer take contracts at face value.
In fact, there are an increasing number of cases where construction firms have been caught out, thinking a generic contract or a contract issued by a payroll or umbrella company would be enough.
It’s not. The courts want evidence that your contracts match reality.
Our contracts reflect your true working relationship with your subbies, so there is no room for misinterpretation or confusion.
And the best part?
Not only do we make sure your contracts really do protect you, but we also offer an insurance-backed guarantee, and we let you keep full control of your payroll.
We’re not interested in charging your subbies a fee just so they can get paid what they are owed. And we think you should have control of your cashflow instead of having to make CIS and VAT payments before they are due to HMRC.
That’s why our services are focused purely on protecting you and your subbies from enquiries into employment status. We take care of your contracts and leave managing your money to you.