Re: FN-FORUM: Ir35 legislation & opting out ?

date posted 30th October 2007 20:10

Well guys; I may be able to offer some first hand experience here. I
have a ltd company and mainly work with large companies either
contracting direct, or via an agency (spit).

I don;t know how much you spend running your company currently; but I
pay an accountant £60 a month + vat and they do everything for me -
payroll, vat returns, PAYE, annual returns, one personal tax return etc.
I also made the rather excellent decision to join the Professional
Contractors Group. I joined them when they started up and have not
looked back. I pay them £200+vat per year.

I recently had an IR35 investigation. The PCG dealt totally with the
Inland Revenue; I didn't have to write, read or speak to them! All
correspondence went directly between them. It ALL stemmed on contracts
and nothing else - nothing! By ensuring I have IR35 friendly contracts,
whether working via an agency, or direct; they all passed IR35. They
gave me a clean bill of health after a very short investigation - which
I believe is quite rare. All I have now to haggle about is expenses
etc. The other big factor helping me I feel, was the minimal Web Design
work I get - effectively meaning I have continuous multiple
customers/clients. I also advertise by way of the website, Yellow Pages
ads over the years etc. Basically, good contracts and avoiding ANY
pointers to hidden employment e.g. turn down any free gym memberships,
free parties. Try to use a personal email if they will let you. Don't
fill in any holiday request forms - just tell them when you will be
taking time off. Every client I have worked for understands about IR35
and they are all happy to help to a degree.

I don't know how much you currently spend running your business, but my
1020+vat a year is it. I have had free banking since I started in 1996
- not one charge.

Think of the costs as insurance. You'll probably be earning around 100k
if you are contracting. 1% (tax deductible) is a small price. If you
also register for VAT, that will return some of that £1020 anyway. I
use the fixed price VAT scheme, where I charge 17.5%, but pay something
like 13.5%? Basically, I can't claim VAT back when I spend, but I
retain the 4% (or there abouts) on every invoice I raise. My accountant
reckons I saved well over £1000 last year doing this - which has
offset the "costs" of running my business. Add to that the ability to
take a low salary and use dividends and the Employer's NI isn;t a big
issue either.

Most accountants will get you an off the shelf company for nothing in 24hrs.

You will definitely pay more tax through an umbrella company - I
guarantee it!

In summary: If the work is lucrative enough, then the costs will be far
out-weighed by the earnings. Join the PCG and make sure you use a
contract recommended by them. Leave the contract discussions until
after you have the contract offer. Then, hold out if the agency gets
funny; I have found they will ALL move on contracts if they see their
10%-20% disappearing!

Yes, running a company is a little hassle, but I don;t think a limited
comany need be that onerous to be honest; especially if your accountant
does 95% of the work for you, like mine does.

If you have any specific questions: bank, accountant etc. feel free to
contact me directly.

:)

Alain Williams wrote:
> On Tue, Oct 30, 2007 at 06:46:29PM -0000, Phillip Healey wrote:
>> I can't see how this is at all true. If it were, then it would effectively
>> rule out any self-employed person from ever doing any work. With actually
>> knowing 100% the facts, I would suggest that this is nothing more than
>> paranoid nonsense from the company you are working with. They obviously
>> think that pushing you into using an umbrella company will rid them of any
>> risks they?ve dreamt up regarding taxation etc.
>
> If you do a runner and don't pay your tax then the agency could
> be liable to pay your tax. If they contract a Ltd company
> then they don't have the liability. It is a small risk, but
> they won't take it. Most contract agencies are like this.
>
>> Although I could be wrong, which would be very worrying.
>>
>> Regards
>> Phill Healey
>> Munklefish
>> Po Box 70
>> Manchester
>> M34 3SQ
>> T: 0161 408 4759
>> ?
>>
>> -----Original Message-----
>> From: [EMAIL REMOVED] [EMAIL REMOVED] On Behalf Of steve
>> wilson
>> Sent: 30 October 2007 18:28
>> To: FN-FORUM / [EMAIL REMOVED]
>> Subject: FN-FORUM: Ir35 legislation & opting out ?
>>
>>
>> Hi guys,
>>
>> I am currently doing some freelance work via people4business. I am
>> having to go through a umbrella company because of new legislation
>> regarding any unpaid tax will be the responsiblity of the contract
>> agency. So they need to cover themselves by making their sellers go
>> through a umbrella company. This way, I basically pay tax as any normal
>> 9-5 person would.
>>
>> The problem for me is, I have to pay admin costs to use the umbrella
>> company, and also I would like to pay my tax at the end of the year like
>> any normal freelancer.
>>
>> Does anyone know anything of this legislation and if there is a way
>> around it ? Is the agency im using giving me the correct information ?
>>
>> I am told, the only way to get around this is to become a ltd company.
>> But my earnings do not warrant this at the moment..it is a lot of
>> paperwork and quite expensive.
>>
>> Also, is the opting out clause in people4business relating to this ir35
>> legislation ?
>>
>> Any help or info is really appreciated.
>>
>
>

--
Dominic Raywood
Rubicon Computer Services Limited
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