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  1. Finance Department
  2. Paying External Workers and Suppliers
  3. Terms, payment types and tips

Terms, payment types and tips

Find an explanation of our terminology and information to support you in making the right, most efficient payment determination.

Hints and tips

Good practice

  • Familiarise yourself with the process beforehand and speak to colleagues who can share lessons learnt.
  • Agree the Route to Payment before any work commences e.g. start the process a month in advance.
  • Understand your role and responsibilities as the engager/hirer.
  • Understand the impact of not following the process i.e. the worker/supplier will not be paid.
  • Gather all necessary data upfront, to support the process, from the worker/supplier.
  • Manage expectations of the worker/supplier – payment route is not determined by their preference or previous payments.
  • Engage your School/Institute/Department Manager or their nominee for guidance, if required.
  • Ensure, if appropriate, the supplier is set up in Agresso before work commences to enable prompt payment of invoices.
  • Ensure a Purchase Order is raised and sent to the supplier before work commences.
  • Be mindful, that whilst the relationship may start as a supplier and customer, there is a risk that over time it may inadvertently drift into employment relationship especially where the project lasts more than 3-4 months or the same worker is used frequently or regularly.
  • It may be necessary to reassess the route to payment, especially where the contract is extended, and the total engagement period is longer than six months.

Avoid

  • Assuming the Route to Payment result will be as requested or desired by the worker/supplier.
  • Making verbal agreement to pay by invoice without tax deducted before the process is completed.
  • Assuming Finance will complete the process on your behalf — the engager/hirer knows the specifics of the individual and the engagement.
  • Delegating engager/hirer tasks to a colleague with little or no knowledge of the work or how it will be performed.
  • Assuming any answers you provide will not require supporting evidence.
  • Attempting payment by Queen Mary credit card, which may lead to it being cancelled.
  • Contacting HMRC directly for advice unless directed by the Queen Mary tax manager.
  • Signing a non-standard supplier contract; a Queen Mary contract template will be provided following approval of the new supplier in Agresso.

Payment types

There are four different payment outcomes that can apply determined by the nature of the engagement between Queen Mary and the worker/supplier, in line with HMRC regulation, and not by their preference.

IR35 rule does not apply to a Ltd company

  • Purchase Order is issued, and an invoice is sent to Accounts Payable for payment.
  • Queen Mary is not responsible for deducting Tax and National Insurance.
  • The payment is processed by Accounts Payable.

IR35 rule applies to a Ltd company

  • Purchase Order is issued, and an invoice is sent to Accounts Payable for payment.
  • An invoice is submitted and processed by Accounts Payable, but Queen Mary is responsible for deducting Tax and National Insurance from the invoice.
  • This payment is facilitated by HR Payroll.
  • The worker will not become an employee nor have any employment rights through Queen Mary.

Individual worker deemed self-employed for tax purposes

  • Purchase Order is issued, and an invoice is sent to Accounts Payable for payment.
  • Queen Mary is not responsible for deducting Tax and National Insurance.
  • The payment is processed by Accounts Payable.

Individual worker deemed employed for tax purposes

  • Queen Mary is responsible for deducting Tax and National Insurance.
  • Payment is processed by HR via a HR One-Off Payment (the worker will not become an employee of Queen Mary).
  • Or by HR temporary employment contract (the worker will become a Queen Mary employee).

Terms, definitions, and key notes

Route to Payment (Flowchart) 

Queen Mary bespoke Internal online flowchart (via QM Connected). Guidance on payment route for individuals, sole traders, freelancers, small Ltd companies, personal service companies, intermediaries.

CEST

CEST stands for ‘Check Employment Status for Tax’. It is a HMRC tool which asks multiple-choice questions to determine employment status and produces a summary of your answers alongside an explanation of the outcome.

PSC - Personal Services Company

The accepted definition of a personal services company is a limited company that typically has a sole director, the contractor, who owns most or all the shares. A PSC is always an intermediary (see below).

Intermediary 

A smaller limited company, where the worker doing the work for Queen Mary is also the owner/director and/or owns more than 5% of shares in the company. Or a partnership where the worker (alone or with one or more relatives) is entitled to 60 per cent or more of the profits of the partnership. Or working through another individual.

Engager/Hirer

The hiring Queen Mary staff member who is responsible for identifying and agreeing the terms of engagement and payment route.

Worker/Supplier

Is the named worker, engaged to complete the Queen Mary assignment/contract.

Sole-Trader, Self-employed, Freelancer

An individual operating under a business name. Able to prove operating as a business, working on a contract basis, with multiple clients and paid directly by the client.

One-Off Payment (Form) processed by HR

An individual is paid WITHOUT a HR payroll contract in place. Specific rules apply. Tax and National Insurance ARE deducted by HR payroll.

Agency

When engaging a worker through an agency, and the worker is not an employee of that agency, the route to payment must still be determined (depending on worker's business type).  The agency must be informed of the outcome of the route to payment assessment, before the start of the contract, because the agency is responsible for any income tax deductions. If not complied with, the liability is shifted back to Queen Mary.

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