You can use your direct payments either to pay an Agency to provide carers, or you can recruit one or more individuals of your own choice.

People provided by domiciliary care agencies are usually employees of the Agency and it would be responsible for its own staff and payment of their wages. In that case, you would not be the employer and you would just need to pay the invoice that the Agency sends you each week or month.

When you recruit an individual of your own choosing (e.g. it may be somebody you already know or someone you find through advertising the position), you will in most circumstances, be an employer and the person appointed would be an employee of yours.

Sometimes however, individuals may state that they are ‘self-employed' carers and would prefer not to be ‘employed' by you i.e. just provide you with a service.

CAUTION: There are special rules applied by HM Revenue & Customs which determine whether a specific working relationship is one of employment or self-employment.

In the vast majority of cases where a non-agency worker is working in the service user's home, it is very likely that they would be classified as employed, and therefore the service user (employer) would be the employer and responsible, not least, for deducting tax and national insurance, and making tax returns to HM Revenue & Customs.

Situations have arisen where direct payments employers have been presented with an unexpected large end-of-year tax demand because the self-employment situation that had been assumed was in fact, subsequently ruled be one of employment. Such demands can be backdated to cover previous years! Therefore we advise the following in situations where somebody claims to be self-employed:

• Establish the employment status of your proposed worker before they begin to work for you.
• If the individual is to provide personal care or social and emotional support in the service user's (the employer's) home, then HM Revenue & Customs would likely take the view that the person is employed, not self-employed.
• Important: Try to establish the employment status of your proposed worker by reading the ES/FS2 leaflet entitled ‘Are Your Workers Employed or Self-Employed for Tax and National Insurance Contributions?' produced by HM Revenue & Customs (your local Rowan Independent Living Adviser or Rowan's Information Service will be able to provide you with a copy).
• Alternatively, you can use an online Employment Status Tool which can be found of the HM Revenue & Customs website (www.hmrc.gov.uk)
• Be especially cautious when considering using an ‘Introduction Agency', where the people they introduce to you may state that they work as self-employed.
• Where the situation remains unclear, you should seek a written decision which can be obtained by contacting your local Tax Status Inspector and asking them to consider the details.

There may be certain situations where using a self-employed person is acceptable, but examples are not given here which could result in further confusion.

Please be aware that some local authorities may have a policy which does not allow direct payments users to take on self-employed workers under any circumstances.

Version 4.0

Version Date: November 2009

The Rowan Organisation - Supporting Independence Through Choice