Any Idea about sundaysolutions - Accountant Company

[ruth11]

Hi Moose

I will certainly find out more on this one as it's something that was mentioned in another thread about LLPs. The chap at Sunday Solutions gave me some contacts at Agencies to speak to (ones I've heard of too!) so presumably they're all happy to work with them. I have some of my own contacts with Agencies too so will speak to them on Monday and find out if they know anything about them.

Thanks for the warning
Ruth

[wizard1974uk]

Sorry ruth,

I'm new on here as well, trying to get some sense out of the ******* on here is like trying to part the red sea, the only time you can get any sense is if you are nasty back at them, it's wrong to do it, but that's human nature were all a bunch of bloody hypocrites.

If I think some is being a sarcastic twat about a question I have asked I will look for an answer myself elsewhere.

I gave up being nicey nicey on here after about 4 posts.

[malvolio]

Ruth

I've not been limited for a few years, but if I remember right, agencies and clients won't touch you if you're "self-employed" or "sole trader" and providing IT services. I don't know if it has to do with insurance, or substitution, or whatever, but I'd be very careful if I was you.

Moose

It's to do with S134c (or whatever it's new name is) that makes the agency liable if you don't pay your taxes: they insist on a limited liability company to be in the chain to take that risk instead of them. Becoming a Sch D person in an LLP has the same effect, always assuming the taxman doesn't regard you creating an LLP with a group of disconnected people as being purely a sham to avoid paying tax and so disregarding it completely. In which case one day you get a bill for the back tax an interest you haven't been paying...

Single contractors use Ltd Cos for good reason. You might like to ponder why there aren't many more LLPs if they are so effective.

[OrangeHopper]

Agencies don't generally care about your arrangements because they can't be held responsible for any taxes you may owe. If they do care, it is because the client, who can be held responsible, wants the reassurances. Agencies like new contractors because they get commission from the umbrella companies if they introduce you.

You can't work as a sole trader because an IT contractor does not fit into the definition of a self-employed person. We don't work for multiple clients over periods of days. If the IR thinks you aren't self-employed they can demand the difference in NI from the client, hence the client's reluctance to engage you as a self-employed person. This is why all contractors worked within limited companies before the advent of umbrellas.

Then of course I might be wrong. I've never been sure of anything, unlike others on here, so ignore everything I say.

[malvolio]

Then of course I might be wrong. I've never been sure of anything, unlike others on here, so ignore everything I say.

Sounds like a plan.

If you don't know the answer, you don't impress anyone by making one up. And it's the agency that's potentially liable, not the client

[ruth11]

Thanks for the reply Malvolio.
At least I have more questions for the Sunday Solutions people.

They told me some scary stuff about the next tax return form having some extra direct questions on it (abotu whether you own your own company and how much you've paid yourself in Divis) and your answers are likely to automatically put you on the radar for IR35 investigation. This makes Ltd Companies more likely than before to get investigated. He also sent me some case reports for people who looked like they'd got IR35 compliant contracts but they were still had. Makes interesting reading.

If you've heard all this before then I apologise
Ruth

[philip@wellwoodhoyle]

They told me some scary stuff about the next tax return form having some extra direct questions on it (abotu whether you own your own company and how much you've paid yourself in Divis) and your answers are likely to automatically put you on the radar for IR35 investigation.

Just more scaremongering from HMRC to try to coerce the ill-informed to accept IR35 etc. It is already blatantly obvious to HMRC those who are running their own company etc. The employment section has two "tick boxes" already to confirm you are a director and controller. That together with a relatively low wage and relatively high dividends makes it obvious - HMRC would have to be incredibly thick not to be able to do a computer database search on those criteria to come up with a list of potentials. Then they can use their PAYE database to check for any other employees of the same company, then use the Corporation Tax database to see what the company accounts show. They DON'T NEED any more questions to work it out - it is all there on a plate for them IF they really want to start looking at more contractors than they do at present. The proposed questions won't help those contractors who are evading/avoiding tax by offshoring, using EBT, using loan schemes, using composites, or just not declaring anything at all. The proposals have no effect - they are there just to try to get more people into voluntary not paying the low salary/high dividend option, and more people into believing IR35 applies when it doesn't.

[ruth11]

Was sent this as an example of the risk I'd be taking if I went Ltd and then got investigated:

Judgement was handed down last Friday in the much-vaunted IR35 High Court case of Synaptek v IR, also known as the Stutchbury case.

Mr Stutchbury had originally been ruled to be within IR35 at the General Commissioners and had appealed to the High Court to contest this view. The Court found in favour of the Revenue, confirming the original ruling that IR35 did apply to the arrangements between Mr Stutchbury and his end client, EDS. The contractual arrangement was complicated by the fact that there was no direct contractual relationship between Mr Stutchbury’s company Synaptek and EDS, as Synaptek’s agreement to provide services was made with an agency, NESCO. EDS was itself providing services to the Benefits Agency at the Inland Revenue as successor to the Government IT Services Agency, which was the end client of Synaptek and NESCO during a previous period.

Mr Justice Hart emphasised throughout that it is not for him to decide the deemed employment status of Mr Stutchbury, merely to decide whether the General Commissioners had erred in law in their original decision. He has not therefore given any additional guidance as to the relative weight of the different status indicators, but it will be useful for contractors to be aware of some of the salient facts about the engagement. The Judge summarised the factors in this case that pointed to a “contract for services” (deemed self-employment) as follows:
 Synaptek/Mr Stutchbury was “in business on its own account”. This was demonstrated by substantial investment in the company; a varied client base both historically and during the currency of the EDS engagement; Synaptek had in the past engaged a total of four to five employees.
 EDS only had “limited control” over ‘how’ the work was to be performed, or specifically ‘when’. The Judge did not particularly refer to the limited control as to ‘where’ the work was performed – this was one initial location subject to change by agreement with the agency.
 Contract contained a “right of substitution”. This was stated as a factor for deemed self-employment even though both parties had accepted that Mr Stutchbury personally performed services. The actual clause in the agreement was negatively worded and required the unqualified consent of EDS. Mr Justice Hart stated: “the effect of the contract is that, unless and until agreed otherwise, the services do have to be performed personally by Mr Stutchbury”.
 Synaptek was “responsible for training” for its representatives and provision of computer facilities at its own premises.
 Intellectual Property Rights had to be assigned to EDS, rather than already vesting in EDS as would be the case for EDS employees.
 Synaptek was required to maintain “professional indemnity insurance”.
 Synaptek/Mr Stutchbury had “flexibility of hours worked”.
 Synaptek/Mr Stutchbury brought in its “own reference books” whilst on-site. This was stated as a factor for deemed self-employment even though Mr Stutchbury did not use any of his (or Synaptek’s) equipment on-site specifically to perform the work.
Conversely, the Judge summarised the factors in this case that pointed to a “contract of services” (deemed employment) as follows:
 Minimum 37.5 hours per week required, broadly equivalent to a “normal working week”.
 The only risk borne by Synaptek/Mr Stutchbury was the risk of insolvency of the agency or EDS. This point is of interest as there are other facts that suggest that there was more risk than was identified by the Judge. For example the Agreement could be terminated with immediate effect if the services were not performed to the satisfaction of EDS.
 The duration was for a “fixed period” of six months rather than being linked to completion of a particular project. This emphasises the need for a genuinely project-based contract rather than merely ‘time and skill-set’.
 Mr Stutchbury worked “alongside EDS employees” and was sufficiently integrated to have an EDS line manager.
 The contract required “compliance with all instructions” of EDS. It is important to note that there was no subsequent mention of the other parts of the respective clause in the Agreement, which also referred to on-site rules, procedures, policies etc of EDS.
It is interesting that, although mutuality of obligations was not stated as a specific factor for or against a contract for services, it was examined in the judgement. The particular clause in the agreement that had been relied on by Synaptek to exclude mutuality of obligation read as follows:

“6.4: In any event no payment will be made by NESCO to the Company in respect of any contractual period not actually worked including notice periods.”

The Judge contested that the clause served merely to emphasise that payment is dependent on actual work having been done, and does not detract from a separate clause (4.3) requiring the agency (and through the ‘hypothetical contract’ requiring EDS) “to allocate work to the Company”. The Judge also highlighted the often-misunderstood key distinction between mutuality of obligation during the currency of the contract, and mutuality of obligation between contracts. The Judge effectively considered that there must be an obligation on the agency/EDS to provide work during the currency of the contract, as otherwise the various termination provisions could serve no purpose.

The decision is a blow to many contractors who may believe that they are outside the scope of IR35 and once again highlights the importance of the actual arrangements being properly reflected in appropriate contract terms. The decision confirms the importance of properly drafted ‘project-based’ contracts as a means of legitimately avoiding IR35. It also counters advice given by some advisors that all that is required is for the contractor to be ‘in business on his own account’ - a theory effectively rejected by the Court. The underlying principle remains true that, given the complexities involved, the only security a contractor can gain is to have proper legal advice from the outset on how to operate, matched with a proper commercial agreement.

There is no simple shortcut around IR35, and the current lure in some quarters for contractors to seek comfort from completing a simple question and answer form is simplistic and dangerous in the extreme.

[OrangeHopper]

Malvolio, I'm so glad there is someone on here that knows everything.

... it's the agency that's potentially liable, not the client ...

So that I may be educated by the master, please point me at the relevant source.

[bellymonster]

Ruth, I've tried the LLP solution. Trust me, it aint the magical solution that they make out. I was with a company called Contracting Solutions and they promised as high as 85% returns. But this really depends on how much in the way of expenses you dare to push through. In reality I think I was nearer 65%.

I was new to contracting and a bit wet behind the ears, but I soon caught on and switched to my own Ltd comp within 3 months. From that point on I've earnt more, without taking the p*ss on expenses, and feel more in control.

Even Contracting Solutions realised they might be on a sticky wicket with agencies and canned the product in favour of Ltd comps.