Paying friend for services

[Surefire-Solutions]

I have a business operating as a Ltd company. Recently a friend did some one off work for me which I agreed to pay them for.
They have a full time job, and are not planning on setting up a business, but did the work for me as a one off.

Once I pay them is there anyhting they need to do to avoid either of us getting in trouble with the tax man etc?

I realise this isn't stricyly my responsibility, but I have agreed to help them out as they helped me.

Thanks

[tired-boy]

They are not self-employed are they?

[Surefire-Solutions]

Originally Posted by tired-boy

They are not self-employed are they?

Unfortunately not, by full time job, I mean they are an employee of a company not involved in anyway in my project.

[fisicx]

They maybe your friend but if the taxman comes to call then it's not your problem.

Employ their services and ask for a invoice, pay them and file the invoice. That's the end of your obligation. If they them fail to declare this to the taxman I can't see how you can get into trouble.

[Surefire-Solutions]

I realise this isn't my responsibility, hence I mentioned that in my post.
My question is what is their responsibility after I have paid them?

[tkessex]

If they remain in full time employment (and have their tax and NI paid by PAYE) then they will need to fill out a form at the end of the year, declaring any additional income they have recieved and how much tax etc. they are due to pay.

I don't think they need to register as self-employed if they're already using PAYE, but a quick call to HMRC (why people can't do that in the first place is beyond me) is all that is needed.

[Joyous]

Originally Posted by fisicx

They maybe your friend but if the taxman comes to call then it's not your problem.

Actually if the taxman decides that your friend is employed rather than self employed then it will become your problem as they'll come to you for the PAYE, not your friend.

You've said in your post that your friend is not self employed and presumably he has no plans to become so. In future deduct the tax/NI and pay your friend net.

Regards

Joy