Booking a Sole Trader on YunoJuno involves answering some questions to comply with HMRC rules known as “SDC” – this stands for ‘supervision, direction or control’.
These questions are about understanding the level of supervision, direction or control a client has over what, how, when and where a Sole Trader delivers their assignment to the client. The answers to these questions determine how the Sole Trader must be treated for tax purposes – paid gross or under PAYE rules. These rules only apply to Sole Traders.
Understanding supervision, direction or control (SDC) is vital for both Sole Traders and clients, because it’s part of tax compliance for everyone involved.
HMRC define each part of SDC like this:
“Supervision is someone overseeing a person doing work, to ensure that person is doing the work they are required to do and it is being done correctly to the required standard. Supervision can also involve helping the person where appropriate in order to develop their skills and knowledge.
Direction is someone making a person do is/her work in a certain way by providing them with instructions, guidance, or advice as to how the work must be done. Someone providing direction will often co-ordinate the how the work is done, as it is being undertaken.
Control is someone dictating what work a person does and how they go about doing that work. Control also includes someone having the power to move the person from one job to another.”
If a client wants to book a Sole Trader on YunoJuno, the platform will ask some questions to determine if the way the client wants the Sole Trader to deliver the assignment will be subject to SDC.
These questions will cover:
The level of expertise and experience which the client is booking the Sole Trader for
The detail of how the Sole Trader will apply their expertise and experience to the assignment
The level of self-determination the Sole Trader has in how they organise their own working day – where they work, what they do and how they do it
The level of client knowledge, expertise or resources the Sole Trader may need to call on to deliver the assignment
The level of coaching and instruction that may be required for the Sole Trader to deliver the assignment to meet the requirements of the brief
The client’s answers to the questions on the platform will be provided to the Sole Trader so that there is full transparency and both client and Sole Trader confirm that the answers are factually accurate for the way the Sole Trader will be delivering that assignment.
If the way the client wants the Sole Trader to deliver the assignment is subject to supervision, direction or control, then the Sole Trader must be paid on a PAYE basis. If this happens, YunoJuno will invite the Sole Trader to carry out this assignment via an umbrella company. This will ensure that PAYE is correctly administered.
YunoJuno does not recommend that a Sole Trader subject to SDC form a limited company – this will create more cost and administration for the freelancer and tax will still be deducted at source, this time as “Inside IR35”.
The YunoJuno platform will only require this for assignments which are subject to SDC; any assignments by Sole Traders which are not subject to SDC will continue to be paid to Sole Traders gross in the usual way.