“your subcontractors can’t wear uniforms with your logo on.”

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This is one of most common myths of the construction industry! 

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Your subbies can wear your branded uniform – they can even have your logo tattooed on their head if they like.

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HMRC don’t care what your subbies wear. They care about whether your subbies should actually be classified as employees or not. And that has nothing to do with their outfits.

As long as you can demonstrate a legitimate business reason for why your subbies are wearing what they are wearing, HMRC will move on to more important issues.

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Legitimate business reason

As the main contractor, you have health and safety obligations, and a key part of that is making sure your subcontractors are easily identifiable on site.  

You could give them a ‘security pass’ that can be shown on demand. Or you could issue them with branded clothing and safety equipment.

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The fact any uniform or PPE has your logo on is irrelevant. Yes, it’s beneficial to you because it gives your company a professional image, but that’s just a happy consequence. The main goal is to make your subbies easily identifiable for H&S purposes.

But you need to include it in your subcontractor contracts. Specify that your subbies will wear branded items while on-site for H&S purposes. That way, if HMRC ever makes an enquiry, you’ve covered yourself.

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So what are HMRC looking for?  

HMRC are looking for evidence that your subcontractors are genuinely self-employed – that they are a business in their own right.

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It doesn’t matter if you are their only client. It doesn’t matter how long you work with them, how you pay them, or whether they wear your uniforms – as long as they are genuinely self-employed.

And it’s important to remember that it’s your responsibility as the contractor to determine employment status. Your subbies can’t claim to be self-employed just because it suits them. You’ll be the one paying the fines if HMRC decides they should be reclassified.

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So how do you prove self-employment?

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Well, remember that contract we mentioned earlier? It really comes down to that.

But the contract has to match up to reality. It’s not enough to simply say you work a certain way – it has to be true.

So the first step is being completely honest. Are your subbies really subbies, or should you be putting them on your PAYE?

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It comes down to three tests:

• Personal Service
• Mutuality of Obligation (MOO)
• Control

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Personal Service – is the subcontractor expected to carry out the work personally, or can they send a substitute (with the relevant skills) in their place?

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Mutuality of Obligation – are you obliged to keep offering your subcontractor work, and are they obliged to accept it?

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Control – is the relationship between you and your subcontractor one of master and servant (if you don’t live in Victorian times, that means do you tell your subbies what to do, when to do it and how to do it).

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This is a very simplified overview of the tests, but if any of them are ringing alarm bells, you probably need to speak to us.

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But first, back to those contracts.

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Is it really as simple as having a contract?

Well, yes and no.

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Yes – as long as your contract documents the true working relationship between you and your subbies so HMRC cannot misinterpret them as employees.

No – because creating a bespoke, watertight contract is time-consuming and complex.

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You can create one yourself, but it won’t be a quick job, and you’ll need to feel confident with legal terminology.

You could get an off-the-shelf contract, but these rarely protect you fully if HMRC comes calling.

You could put a payroll company between you and the subbies, but this will impact your cash flow.  

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This article is provided by our good friends over at Hardhats who are providing bespoke, insurance-backed subcontractor agreement for you.

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You can download their free book here which covers so much when it comes to subcontractors!

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