new to contracting, need some advice please

[pabs]

Hi All

I have recently been put forward for some contract roles through a recruitment agency. The agency have asked me to inquire about either setting up a limited company or using an umbrella company.

Last night i phoned a company called Compare the Umbrella (comparetheumbrella.co.uk). They took some details off me, mainly the recruitment agency i was using and proposed daily rate. The daily rate of the contract is £310 and the guy from Compare the Umbrella explained that i could be taking home £1243 per week based on this rate. My understanding is that Compare the Umbrella are just like a price comparison site (like money supermarket, compare the market etc) He passed some details on to an umbrella company who have phoned me today. A lovely lady rang me and reiterated what Compare the Umbrella said. That i could be taking home £1250+ per week (about £5400 a month) How it would work is that i would be paid a salary of £250 a week on which i would pay tax and NI and the rest would be placed into a loan fund and paid back to me. This umbrella company are called Opus Management. She also said that they have contractors working through the agency i have been dealing with which reassured me. However I did some googling and found an forum post (on here) about them where people have said that HMRC have issued bills for unpaid tax. I got back in touch with the lady from Opus who then called me and assured me of Opus' compliance with HMRC regulations, saying that in 8 years of trading they have only had 10 or so investigations from HMRC, all of which HMRC have been satisfied with. This is out of 1500 contractors they work with. Basically the bottom line is i don't know who i can believe or trust.

I also did some research this afternoon about setting up a limited company. I had an online chat with a very helpful gentleman from Intouch accounting. I told him all my details again and i can't remember the exact figures but he said my annual take home would be approx £61750 for the 310 daily rate. Monthly was about £5147 (about 1188 a week) This was taking into account expenses. I also contacted another company called GiantGroup, they provided similar figures to InTouch. Problem with limited companies though is IR35. What is the likelihood i would be outside that?

Basically what i am asking you good people is for advice for a first time contractor on what is the best way to go. I'd like to be contracting for the foreseeable future. Opus (as an umbrella) wont be affected by IR35 but i have heard some horror stories on this forum about HMRC investigations. Has anyone on here used Opus without any contact from HMRC?

Many thanks

[teapot418]

No, don't touch loan schemes with a bargepole.

HMRC Scheme Enquiries

All these people were also assured their schemes were compliant. Some have tax bills and penalties running into hundreds of thousands. Don't do it.

If you want to go umbrella, you need a compliant umbrella - your take home will be much less, but you will be able to sleep at night.
Get in touch with Contractor Umbrella - Lucy (their MD) posts on this site.

If you are outside IR35, then a ltdCo will give you greater take home - read up on the guides to the right. If your contract is public sector, things get more complicated as it will be the client who decides your IR35 status.

[eek]

Well that comparison site is working for their benefit not yours (as a hint umbrella companies don't like spending much on commission fees and loan companies pay more - because they both can and have to).

for a list of honest umbrella companies look at All Umbrella Companies Are Equal - Straight Talking Umbrella Companies but check if you need one:-

Reasons for using an umbrella company:-

1) when you begin contracting so you get used to how contracting works (you may not like it)
2) if you have a public sector contract inside IR35....

[Michael at BI Accountancy]

As teapot says, stay well clear of any loan scheme (unless you like sleepless nights and potentially jail food!).

For a contractor who is outside of IR35 then Ltd is the most tax efficient method of operating and will give the greatest take home pay.

If inside IR35 then as the guys have put, go with a complaint umbrella company and don't be blinded by any promises of schemes being HMRC compliant or offering you "to good to be true" take home percentages.

First thing you need to determine is your IR35 status, speak to a specialist you can help guide you on this.

[pabs]

Thank you all

Thank you all very much for your sound advice so far. At the moment I'm just investigating whether it is worth me going into contracting (I think it definitely is!). For what I am doing max salary I've been approached with (from agency) is 55k (I'm currently earning 46). Been a .net developer now for over 13 years and contracting has always appealed to me.

I will do some more research on what my IR35 status would be next week but I guess that all depends on the contract. The one I've applied for (and been put forward to the client) is a private sector software development role on a 3 month rolling contract, would any of you know what the likelihood of that being outside IR35 is?

Also does anyone have first hand experience of Opus?

Once again thank you all so much for taking the time to reply, I'd buy you a pint if I could 🍺

[cojak]

Also does anyone have first hand experience of Opus?

Oh yes, these people have first hand experience of Opus. And of HMRC too... http://forums.contractoruk.com/hmrc-...an-scheme.html

[cojak]

Thank you all very much for your sound advice so far. At the moment I'm just investigating whether it is worth me going into contracting (I think it definitely is!). For what I am doing max salary I've been approached with (from agency) is 55k (I'm currently earning 46). Been a .net developer now for over 13 years and contracting has always appealed to me.

I will do some more research on what my IR35 status would be next week but I guess that all depends on the contract. The one I've applied for (and been put forward to the client) is a private sector software development role on a 3 month rolling contract, would any of you know what the likelihood of that being outside IR35 is?

Also does anyone have first hand experience of Opus?

Once again thank you all so much for taking the time to reply, I'd buy you a pint if I could 🍺

And research IR35 first - you'll then understand why we won't/can't answer that question.

[teapot418]

Also does anyone have first hand experience of Opus?

You still considering it?

If one person comes along and tells you "it's fine", you're going to ignore the sound advice you've been given, aren't you.

[teapot418]

Oh yes, these people have first hand experience of Opus. And of HMRC too... http://forums.contractoruk.com/hmrc-...an-scheme.html

And another

http://forums.contractoruk.com/hmrc-...ml#post2385650

[lucyclarityumbrella]

Well that's an interesting site! Our logo appears on the site, without our permission I may add, and when I requested a quote from ourselves via the site, I have had no such enquiry come through! My guess is no-one will be calling me back!

I have also tried to find a contact to get them to remove us from the, to no avail! Anyone have a clue who is behind the site, as there appears to be a few reputable companies on there who I assume are in the same situation as us?