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

date posted 30th October 2007 22:45

Thanks for all the advice and info...not really sure if i understand
much of it as im really a designer and artist than an admin guy.

My earnings are no where near 100k. I dont think my charges per hour
could even get to that if I worked all year. The thing you say about
paying more tax through an umbrella company concerns me. Isnt tax worked
out on the basis of your income, expenses etc, so even if they did
calculate my tax to be more (via the umbrella company), wouldnt I get a
tax rebate after calculations were complete, or is this something that
the IR dont do ?

I think I will speak to an accountant anyway. I was using tax assist
accountants for my self assessment last year...would you recommend them
or any others ?

Cheers

Steve

Dominic Raywood wrote:
>
> 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 Ł60 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 Ł200+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 Ł1020
> 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 Ł1000 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.
>>>
>>
>>
>