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

date posted 30th October 2007 20:29

Dominic's feedback is well worth taking as the safe course.

As for those that are in disagreement with my feedback: all I can say is
I've handled many tax tribunals for clients - it's all about the evidence.
If the evidence is that a person sought and acted upon advice from the
Revenue it is hugely unlikely the tribunal will go against them, especially
if supported by a lack of intention to defeat the tax system. If that is the
end result it is also the basis of advice at the beginning. Dominic's
suggestion of acting via an accountant comes with the protection of
credibility and professional indemnity.

Mike A.



----- Original Message -----
From: "Dominic Raywood" [EMAIL REMOVED]
To: [EMAIL REMOVED]
Sent: Tuesday, October 30, 2007 8:59 PM
Subject: Re: FN-FORUM: Ir35 legislation & opting out ?


>
> 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
> W: http://rubiconcsl.com
> E: [EMAIL REMOVED]
> T: 08456 521 561 (+44 1823 698420)
> F: 08456 521 561
> M: 07050 204998 (+44 7811 252573)
> Skype: RubiconCSL
>
> --
> Freelancers, contractors earn more with Prosperity4
> Call 0870 870 4414 or visit www.prosperity4.com
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>
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