If a self-employed person is no longer self-employed: risks and solutions for businesses

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      Companies are increasingly working with self-employed individuals — it’s convenient, fast and, at first glance, safe. However, if an individual loses self-employed status but continues working under the same arrangement, the organization risks serious tax consequences. Tax authorities may reclassify such payments as employment income or as payments under a civil-law contract, which would lead to additional assessments of personal income tax and social insurance contributions, as well as fines and penalties.

      What happens if a self-employed person loses their status

      Status loss can occur for various reasons: exceeding the income limit (2.4 million rubles per year), voluntarily exiting the regime, changing the type of activity, or technical failures in the “My Tax” application. It is important to understand: even if the counterparty did not notify the company, the company is responsible for verifying their legal status. The tax inspectorate may demand payment of personal income tax (13%) and insurance contributions (up to 30%) on the total amount of all payments made after the status was lost. In addition, additional assessments may be made for the previous three years.

      The situation is especially dangerous when the cooperation looks like disguised employment: regular payments, subordination to internal rules, use of corporate resources. In such cases the risks increase manyfold.

      What to do if the problem has already arisen

      If the tax authority has initiated an audit or issued additional tax assessments, it is important to act promptly and correctly:

      - Request confirmation from the former self-employed person of the loss of status (screenshot from the app, notification from the Federal Tax Service).

      - Analyze the nature of the relationship: was there a civil-law contract, was the contractor’s independence respected.

      - Prepare written explanations for the inspectorate with supporting evidence of good faith.

      - If necessary — challenge the decision through a higher tax authority or in court.

      - In the future, review the policy for working with individuals and implement regular checks of their status.

      How to avoid this

      The best protection is prevention. Before each new payment the company must ensure that the counterparty truly remains self-employed. Regular checks of a self-employed person’s status make it possible to avoid errors and minimize risks. There is no need to waste time on manual requests or calls to the Federal Tax Service — simply use a specialized tool. You can check a self-employed person’s status for free and instantly: the service automatically cross-references data with the official database of the Federal Tax Service and provides an up-to-date result.

      Using modern automation technologies significantly reduces accounting staff time and protects the company from possible claims by tax authorities and other supervisory bodies. In light of increased control over financial operations with individuals, complying with established procedures becomes a mandatory condition for the safe operation of the enterprise. Automated solutions help reduce the likelihood of violations, minimize the risk of penalties, and create a reliable legal foundation for the company’s effective functioning.

      With growing attention from tax authorities to schemes of interaction with individuals, neglecting to check a self-employed person’s status turns from a formality into a serious threat to business. Regular control not only protects against unexpected additional assessments, but also demonstrates the company’s good faith to regulators. Investing a few seconds to check before each payment saves tens or even hundreds of thousands of rubles — and protects the company’s reputation.

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