Confused!

[jools]

Hi

I have been contracting for about 3 years now as a Civil Engineering Technician

With all the recent changes to IR35 rules I am really confused

Originally I worked through an agency (Hayes Montrose) and the account was Sterling in Warrington

Currently however I am working direct and have been using Filetravel in Liverpool. They have recommended I set up a Personal Service Company

Can anyone tell me if this is good advice?
Should I continue using Filetravel or are there better options for me?
I have seen stuff on the forums about insurance, do I need it?

I really don't have a clue about all this stuff. I am used to putting my hours in at the end of the week and thats it. I get a bit of a mental block when it comes to taxes etc!

[malvolio]

There have been no changes to IR35, there have been changes to stop people pretending to have a company to avoid paying tax. So...

Step one - get an umbrella company now, so you are at least covered. OK, you will find youself paying more tax but in all honesty you should have been doing that for 3 years...

Step 2 - now you are safe from the taxman, go read the first timer guides on this site and www.pcg.org.uk and learn how it is supposed to work. If you want to be a real contractor, now is probably a good time to learn the rules and the constraints.

Step 3 - Get your own company, hire a good accountant, and run a proper business. Go back to saving tax on account of your extra business risk.

If you're really brave, go straight to step 3, but you need to do some serious learning first.


ps. I'm going to save this thread so next time someone asks this question (probably in the next 10 hours) I don't have to write it all out again!

[beerbarrel]

and when you say a good accountant, it seems pretty clear that SJD, NW and 1st Accountants all fall under the definition of "promoting and facilitating" and should be avoided?

I picked this up from HMRC " The Treasury explained that accountants are exempt if they are merely providing accountancy services. But if an accountancy firm is in the businesses of promoting 'MSCs' it moves out of the 'merely providing accountancy services and comes into a different category' where the exemption does not apply. So, in certain circumstances and depending on the nature and activities of the accountancy firm, merely being an accountant does not bring automatic exemption."

[gingerjedi]

No, Nixon Williams, SJD etc are proper accountants, they do not provide MSC's they provide accounting services for people who run their own Ltd companies.

[ASB]

and when you say a good accountant, it seems pretty clear that SJD, NW and 1st Accountants all fall under the definition of "promoting and facilitating" and should be avoided?

It doesn't seem clear at all. Why not review THEPUMA's thread here, you may reach a different conclusion.

http://forums.contractoruk.com/thread16145.html

[Donkey]

I just left Giant and been advised to use a small firm of accountants and steer clear of SJD, NW, et al. Giant reckon they are all caught.

[ASB]

Maybe, but Giant also reckon absolultely everybody who is contracting is caught (at least thats what they imply in their release). I think this is a minorirty view.

Personally I would have thought that SJD, NW, Darren etc would have a better view of their own business model than Giant have of it and might be in a better position to assess the impact - if any - on their practices.

[malvolio]

I just left Giant and been advised to use a small firm of accountants and steer clear of SJD, NW, et al. Giant reckon they are all caught.

Quick answer - bollocks.

Slightly longer answer - pure accountancy companies who do not exercise control over a client company's finances or have any connection to the bank accounts used by that company are not in the scope of the new rules.

[beerbarrel]

No, Nixon Williams, SJD etc are proper accountants, they do not provide MSC's they provide accounting services for people who run their own Ltd companies.

but you miss the point, they are exempted from the exemption because they are not providing 'normal' accounting services, they are providing msc provider type services. Normal accountacy services are annual audits etc NOT monthly book-keeping, calculation of dividends & PAYE, setting up bank accounts, completing monthly returns, and so on. The fact that they are being paid monthly is a prime facia arguement against their services being normal accountancy, and look at their web sites - if they aren't promoting and facilitating the use of psc as a tax motivated incorporation, then I don't know what more they could do!

I have no doubt that Nixon Williams and SJD are proper accountants but a "discernable" part of their business is caught by the new legislation - they just haven't worked it our yet.

[jools]

Erm

You have all completely confused me!

MSC's, business models, dividends?

It means nothing to me

I just wanted some basic advice on what I should do and any dangers involved regarding the taxman

I am completely thick when it comes to all this

Even the pcq website completely baffles me!