Service Company- Composite to Limited

[simondolan]

Composites

I think it fairly safe to say that the days of the composite company are numbered. The Revenue have said that they intend to clamp down on them, and I know of at least one major Company that has completely changed their expenses policy in light of a recent Revenue investigation. They are no longer allowing contractors to claim ANY expenses on their first contract with them.

Composite companies are nothing but an administrative convenience for the provider. It is much cheaper to put 20 contractors through the same company rather than deal with 20 seperate companies.

If you are outside IR35 you should open your own company. You'll get the benefit of the VAT flat rate scheme, earn interest on the cash in the account, and be in control of your own business.

Inside IR35 and the choice is more marginal - still benefits to be gained by running your own Company, but you may decide that those benefits are not outweighed by the increased admin, and so look for a decent umbrella Company.

Get a decent accountant to do some projections for you based on your rate. Be careful with the on line calculators as these are almost always skewed with heavy assumptions.

I'd be happy to do some figures for you if you want to mail me at the usual.

[redboy]

[QUOTE=simonsjdaccountancy]If you are outside IR35 you should open your own company. You'll get the benefit of the VAT flat rate scheme, earn interest on the cash in the account, and be in control of your own business.

Inside IR35 and the choice is more marginal - still benefits to be gained by running your own Company, but you may decide that those benefits are not outweighed by the increased admin, and so look for a decent umbrella Company.[QUOTE]
If you are "within IR35" what are the implications for the end client? Are they laiable for employers NI contributions, etc.?

[Pondlife]

Managed Vs Composite

I would stay away from Managed companies - that is, paying for someone to set up an off the shelf company (Their Co xxxxxxx Ltd) and manage it 100% for you. Technically it is a Ltd Co where you are the sole director & shareholder but they manage the tax/paye/VAT etc and also the company bank account (if there is one).

In the budget report section 5.86 states that:

the Government will consult on action to tackle disguised employment through managed service company schemes

As mentioned before - decide on a company name, get an accountant who can help with setting up, many will also help with PAYE and act as your agent to the tax man but with YOU still in control.

HTH

[malvolio]

Thud...thud...thud...

No. You are. The joy of being a contractor is that you have to pay all the money, that's why they pay you gross and that's why you need to talk to accountants like Simon who can explain exactly what you're getting into.

You clearly haven't done any research into the business you are now in, so go read the sticky thread on this board, the first timer guide on this site and the first timer guide on the PCG website at www.pcg.org.uk

Then come back with any bits you don't understand.

[simondolan]

QUOTE: "If you are "within IR35" what are the implications for the end client? Are they laiable for employers NI contributions, etc?"

No, within IR35 you are liable for all your own taxes and NI - the end user or agent simply pays your your contract rate.

[stevie]

conflict of interest?

I presume the advice from SJDAccountancy is to use the services of Contractor Umbrella (since they own them).

[malvolio]

No it isn't, if you do a bit of research. Now go back to your toys and leave the grown-ups alone.

[redboy]

I would stay away from Managed companies - that is, paying for someone to set up an off the shelf company (Their Co xxxxxxx Ltd) and manage it 100% for you. Technically it is a Ltd Co where you are the sole director & shareholder but they manage the tax/paye/VAT etc and also the company bank account (if there is one).

In the budget report section 5.86 states that:

As mentioned before - decide on a company name, get an accountant who can help with setting up, many will also help with PAYE and act as your agent to the tax man but with YOU still in control.

HTH

Does it cause me a problem to continue working for the same client ? i.e 1 week I am working there through a composite company, the next week I am working there as my own limited company. Does it cause nay problems as far as IR35 status?

[Pondlife]

Does it cause me a problem to continue working for the same client ? i.e 1 week I am working there through a composite company, the next week I am working there as my own limited company. Does it cause nay problems as far as IR35 status?

Wouldn't have thought so. They should just draw up a new contract/schedule for the date you start with your Ltd. ~They may winge about the additional admin but they wouldn't risk losing the gig over it.

[dmini]

Some agencies won't let you switch eg umbrella-limited etc mid-contract - you have to wait for a renewal point. Been there, done it.