Accounting

The visitors

Visiting teachers can be engaged on an employed or self-employed basis. But the responsibility for determining their exact status for tax purposes is with the school, not the visiting teacher, warns Lorraine Owens

It matters not one jot the status someone says they have or how another school is treating them, if they are deemed by your HMRC office to be employed, any liability will be that of the school, not the visiting teacher.

There isn’t room in this article to examine the tests for self-employed status, but as a start, if you are treating some of your visiting teachers as self-employed, what’s different from those other visiting teachers who are on your payroll? If there isn’t much between them, can you really justify self-employed status?

Contract terms that state that an individual is liable for their own taxes may help you recover the liability through the courts, but will not stop HMRC issuing you with a liability notice. If the conditions for self-employed status are not met, the school must pay the teachers through payroll under deduction of tax and NIC. Where self-employed status can be justified for visiting teachers, there is still the matter of the Categorisation of Earners Regulations.

The right definition
The Categorisation of Earners Regulations 1978 were introduced to help certain groups of workers who, typically, did not build up a contribution record for National Insurance. One such group are “lecturers, teachers and instructors”. These regulations override the position of self-employed status, but for NIC purposes only. Where someone is caught by these Regulations they are deemed to be employed and are subject to Class 1 employer and employee NIC. In other words, even if genuinely self-employed for tax, they are employed for NIC.

The Regulations apply where the following are met:
• anyone who is engaged as a lecturer, teacher, instructor or in any similar capacity in an educational establishment by any person providing education is to be treated as falling within the category of employed earner provided:
• s/he is not an agency worker;
• the instruction is not given as public lectures;
• the number of days on which the instruction is given has not been limited, by prior agreement, to three days or less in three consecutive months;
• s/he gives the instruction in the presence of the person to whom the instruction is given (except where working for the Open University); and
• her/his earnings are paid by, or on behalf of, the person providing the education.
• an educational establishment includes any place where instruction is provided in any course or part of a course designed to lead to a certificate, diploma, degree or professional qualification, or in any like place where courses are substantially similar but do not lead to a certificate. Thus, universities, colleges, schools of all kinds, including schools of arts, crafts and languages, are all within the scope of the Regulations.

In the know?
Knowledge of these Regulations varies greatly from school to school. Some schools have been working under the belief that the Regulations only apply to visiting music teachers and others, particularly the larger schools, understand the rules and think they have them covered, but then find payments to such teachers are slipping through the net and are being paid via the purchase ledger and bypassing payroll. In some cases, schools have never heard of the Regulations.

Where the visiting teachers contract directly with the parents and the fees are paid to the visiting teachers by the parents, the Regulations do not apply. Exercise care, though, as HMRC may still attack the arrangement if they can find a chink: for example, if the school makes good unpaid fees.

Lorraine Owens is a tax manager at haysmacintyre.

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