A question which crops up quite regularly, in different ways, is ‘how much can I pay someone for casual labour?’
There was a time in the dim and distant past that HMRC had a more relaxed approach to short term or ad-hoc workers, and ‘cas lab’ was regularly a feature in business accounts.
Since the introduction of RTI (2013), the rules were tightened up significantly, and the answer now to the above question, is absolutely nothing. All staff have to be paid through the PAYE system, so they will need to complete a starter form, be added to your payroll, and receive a P45 when they leave, even if you only employ them for 5 days or for odd days here and there. This also applies if you are employing students for holiday jobs.
The only people it doesn’t apply to are harvest workers and shoot beaters if they are going to be employed for less than 2 weeks, which obviously doesn’t apply to most businesses.
The risks of having employees who are not paid through PAYE lies entirely with the employer. Should HMRC inspect your accounts/tax return and see that you have labour costs that don’t match with a PAYE scheme, they will treat the amount paid as net pay, and you as the employer will be liable for paying the employee NI, employer NI, and tax that would have been deducted if it had been done properly. We have seen investigations in the past where this bill has ended up being an eye-watering amount of money.
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The same applies for CIS subbies. Unless the work carried out by the subbie is outside the scope of CIS (for instance carpet fitting, or surveying) then any subbie who works for you, even if just a one-off job must be verified under the CIS scheme and have the appropriate tax deduction. Again, the financial risks of not operating CIS correctly lie entirely with the contractor.
