Sarah asked:

If I start my own construction company. Can I pay my contractors and let them be responsible for their own taxation? Eg. company brings in six thousand a week contractors a,b,and c each make eight hundred. At the end of the week I pay them. They then are responsible for their own taxation.

Tony Frost answered:

The main issue you face is that the company does not want the independent contractors to become its employees. There are a number of legal tests that have developed under the common law and statutes.

Generally speaking, if a person reports regularly to the same company, exclusively utilizes that company's tools and takes instructions from that company on a day-to-day basis, that person will be characterized at law as an employee and not an independent contractor.

The courts look at the amount of control exercised by the company over the individual. A true independent contractor works for a number of companies over the course of each year and is free to schedule his work as he sees fit.

In fact, many people in the business community purport to work as independent contractors but would, upon scrutiny by the authorities, be correctly viewed as employees.

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