first timer - outside IR35

**NomDePlum** · 3 November 2006, 19:00

Hi Ian,

I am more or less going through the same thing as yourself. I start my first contract on Monday.

First off, I would say don't believe your agency assurances that the contract is outside IR35, thats what my agency said. When I had it reviewed by Bauer and Cottrell they picked up a couple of minor but important things. They also did it same day which was very impressive. I would advise you to spend the money to get it reviewed by a professional who is independent. Your agent isnt as they WANT you to work for them and saying a contract is outside IR35 is definitely a sweetner. Rember, if it comes to it, it will be your door the tax man knocks on not theirs. If the review comes back saying you are outside IR35 and it is too late to re-negotiate it at least you know. If it is not too late then let them do it for you its all included in the cost of the review.

I am trading through a Limited company, as I think this gives you most control. I've posted my steps to doing this on another thread:

http://forums.contractoruk.com/thread11464.html

I know you say that going through a limited is more hassle and you would prefer to pay the money and have someone else handle it. I did think about this but came to the conclusion that I prefer to have control over it myself.

To be honest once you have set the ltd up the overhead in running it doesnt seem that much greater than going through an umberlla to me. You have to keep track of expenses, do timesheets, year ends, etc, but as far as I can tell this is pretty much true of umbrellas as well. And there is nothing (as far as I am aware) that an umberlla gives you that you can't do through a ltd.

If you are going to go through an umbrella Parasol seem to get favourable mentions here.

For me the biggest headaches of setting up have been form filling and thinking up the company name. I went through SJD for formation, bank account, etc and am using them as an accountant and they have handled quite a lot of this for me.

Just my opinion on your situation and as I havent actually started contracting yet (roll on Monday) maybe you should take it with a pinch of salt.

All the best in what you decide, hope I havent muddied the waters too much.

**IanC** · 3 November 2006, 19:33

thanks nomdeplum. Impressed by how sorted you've got this up front, getting a deep handle on the accountancy / company side of things as well as whatever your work specialisation is.

I actually got the work via industry contacts at the client, agency only came in at the very last minute (they were appointed by the client) so they shouldn't be biased in their own favour, if they turn out to be really poo I can ask the client if they can bring in a different one.
I've already shown my contract to o+g and they've said b+c will review it for them. Suspect I will spend the 190 (only 3 hours pay) on monday anyway for a b+c report myself(always better to be the one paying the surveyor if you want to have the legal backing on the validity of the report, just like a house).

I'm happy to go limited if I can find someone good I can pay to do the bits I don't know about, thats what I mean by avoiding the hassle (got enough to learn with all the technology we have to keep up with) and be liable for any errors. So correct me if I'm wrong, but you'd recommend SJD to take on most of this side?

cheers,
Ian

**NomDePlum** · 3 November 2006, 19:58

I think getting the review done yourself does make sense. Simplifies everything, which is always good.

As far as going limited, my experience of using SJD to go limited was that they provided me with advice up front on how to structure the company i.e. number of directors, shares, etc. Sounds a bit frightening but really came down them asking a few simple questions and giving some guidance.

After that it was pretty much myself (through there portal) that registered the company etc. If you do this, do it during office hours, just phone SJD if you have any questions. They are professionals and are used to answering these sort of questions. I had my ltd registed in a day. They then sent me a number of forms to fill out VAT reg, PAYE reg, Bank account which took about a night in total to do and that is that.

There are a couple of complications regards billing without having a VAT number but they (SJD) will advise you how to get round these until your VAT number comes through. Certainly the agency I am contracting through didnt even blink at it.

After that it was just signing up for SJD to be my accountants, so they would be paid for me pestering them, joining the PCG for additionial support and various inclusive insurance benefits and purchasing insurance from Randel Dorling to cover my company (still sounds good saying it) for Public Liability and Public Indemnity (through PCG website, after joining).

If you do join PCG read rest of my previous post to find link for 15% off.

As I say I havent actually started yet so any complications from timesheets, expenses etc havent hit home but I think as long as you keep track of these it wont be too much hassle. If it is I am sure someone will (kindly) shoot my advice down for me.

**Sockpuppet** · 3 November 2006, 22:31

Originally posted by IanC

due to personal circumstances (young baby etc) don't want the hassle of learning to run company myself. happy to spend a few notes to have someone do it, and at my rate it will probably be profitable versus use of my time.

Its really not that hard. I was like you 2 weeks ago didnt have a clue about Ltd companies and I formed one finding it was easy. Get yourself a good accountant and pay them to take care of it at first. As you get more experianced take more and more back (thats what I am planning to do....) so you get even more for yourself.

Cheers
Richard

**DaveB** · 3 November 2006, 23:28

If you arnt sure about contracting long term or just want to ease into it then an umbrella is a good start. But make sure you get a good one.

Those recommended on here are usually Contractor Umbrella, Parasol and one whos' name escapes me but is "approved" by the PCG. Oh, and Join the PCG if you havnt already. The insurances and free legal advice are more than worth it on their own.

**Jay54** · 3 November 2006, 23:59

Yeh, make sure you get the contract checked over by specialists like Bauer + cottrell as they'll pick up all the things on the IR35 front and their also pretty good at some of the commercial implications as well. Be careful though on using some the composite options on offer as some of them are a rip off.The sales patter I was given was beyond belief

morons all of them.
Good luck!

**autodial** · 4 November 2006, 00:06

SJD are pretty good accountants but they aint that good on the IR35 side of things. You really need to have a) a good accountant who is used to dealing with freelancers b) an agency who pays on time c) specialists like B+C to check out your contrct and d)insurance for when you get pulled by the Revenue. B&C do insurance as well.

**malvolio** · 4 November 2006, 08:11

Originally posted by autodial

SJD are pretty good accountants but they aint that good on the IR35 side of things. You really need to have a) a good accountant who is used to dealing with freelancers b) an agency who pays on time c) specialists like B+C to check out your contrct and d)insurance for when you get pulled by the Revenue. B&C do insurance as well.

Um, bollocks. They just got their QA accreditation from the PCG, which means they have been through the IR35 training course to get them up to speed on the current apllication of the rules, and the latest test cases and contractual requirements. As the only national accountants to get that ticket, they are probably better than most.

We don't keep recommending them (along with Darren and Nixon Williams) because we can spell the name...

**VectraMan** · 4 November 2006, 11:53

Originally posted by NomDePlum

As I say I havent actually started yet so any complications from timesheets, expenses etc havent hit home but I think as long as you keep track of these it wont be too much hassle. If it is I am sure someone will (kindly) shoot my advice down for me.

I started out with an umbrella (Parasol) because I didn't want the hassle, but regret it now as it means I paid a couple of thousand pounds more tax than I had to, and all things considered I'd rather have that money in my bank account.

You'll have to do timesheets and expenses anyway with an umbrella, so the extra work in running a Ltd. is basically in generating an invoice every week/month (SJD give you a template to use), keeping track of payments, and paying yourself salary and PAYE (SJD tell you how much) and expenses at the end of the month. SJD also give you a spreadsheet to fill and from time to time you send that to them and they work out stuff like VAT to pay and corporation tax. It's probably no more than an hour a month, even if you're anal about it like me.

I'd be wary of anyone running the company for you, as at the end of the day it's your company and you're potentially liable for somebody else's mistakes.

first timer - outside IR35