The taxman cometh

David Arnold, Chair of The Association of First Aiders, warns of a little-known tax rule that could leave training providers out of pocket

About 18 months ago, alarm bells started to ring at the web site. A training provider had a demand to pay thousands of pounds in back National Insurance tax. It was not for fiddling the books; it was for using self-employed trainers.

The HMRC (Inland Revenue as we know it) is targeting training companies using a little known tax rule that's applicable to trainers. All training providers that use freelance trainers must deduct National Insurance (NI) from the trainers' fee and further pay Employers NI contribution, no ifs, buts or maybes!

However, that's not all - training providers may be liable for PAYE tax as well! It is irrelevant that the trainer states that he is self-employed.

Employment status is determined by the actual relationship between the Service Provider (trainer) and the Engager (trainer provider). This must not be the same as an employee/employer relationship.

Such factors as financial risk, equipment, insurance etc. and can the trainer supply another trainer in his/her place without authorisation are taken into consideration.

All of this needs to go into a contract. However a simple statement that the trainer is responsible for their own tax is pointless. It is the Engagers' responsibility for tax and this cannot be removed through any contract.

At the Association of First Aiders (AoFA) and the FirstAidCafe we have been sending out thousands of emails making trainers and training providers aware of this potential nightmare.

However I am amazed at how many are still ignoring this threat. Excuses like, "My accountant says that I don't need to" or "They (trainers) sign a contract ..." will not wash. The bottom line is that you, the training provider hold the responsibility.

However, it is not all plain sailing at HMRC as not all tax inspectors are aware of these rules and hence judgement is not evenly handed out.

Last year at the First Aid Forward Conference an employment status specialist from HMRC covered this subject. This month's conference will cover equalling important issues.

Further details can be found at

Return to Training menu