New to contracting, question about client contract and tax / Ni indemnity

[NotAllThere]

Hi, I am about to start contracting and have been given a services contract that contains the wording below. I am a little unsure on this - I am outside IR35 and feel I should be making sure I am paying the correct tax / NI and the company should be responsible for ensuring they have their house in order. Am I overthinking this? Is this a standard clause? I have asked what claims I should worry about and have not really received an answer. Any help appreciated

"The Client and the Contractor declare and confirm that it is the intention of the parties that the Contractor shall have the status of a self-employed person and shall be responsible for all income tax liabilities and national insurance or similar contributions in respect of their fees and accordingly the Contractor hereby agrees to indemnify the Client in respect of any claims that may be made by the relevant authorities against the Client in respect of income tax and national insurance or similar contributions relating to the Contractor's services under this contract. "

Moved to here.

[hobnob]

Just to clarify something, are you (moh00) working as a sole-trader (i.e. self-employed) or do you have your own limited company?

[moh00]

I will be working as a sole trader

[eek]

I will be working as a sole trader

What do you do that makes working as a sole trader sensible (outside of graphic design it makes sense to use a limited company to reduce the risk of unlimited liability)..

[jamesbrown]

I will be working as a sole trader

Are you absolutely sure you're working as a sole trader? I see two conflicting pieces of information here, the first being a reference to IR35 in the OP, which is completely irrelevant if you're a sole trader and the second being the above statement. Do you have your own Ltd. company through which you work or not? You may well be a sole trader but, as eek alludes to, it rarely makes sense and there are some conflicting hints in this thread...

[northernladuk]

Darn, I thought NAT was asking a numpty question and it was open season.. Ah well.

[moh00]

What do you do that makes working as a sole trader sensible (outside of graphic design it makes sense to use a limited company to reduce the risk of unlimited liability)..

Thanks for the feedback - I will be provided IT support services and have one potential contract, which will last 3 months. I plan to use this to figure out whether I am suited to being a contractor or whether I should just go back to being salaried somewhere

I took advice from both a friend who runs their own business and an accountant and the friend basically said to go as a sole trader until I had made my mind up. Possibly bad advice? The accountant told me to set up a limited company but offered no real benefit, just a list of fees (about £120 to set-up and £400-£500 to dissolve if I decide it was not for me).

[moh00]

Are you absolutely sure you're working as a sole trader?

Thanks for this, I am completely new to contracting and suspect I may have misunderstood what I was told or have taken poor advice. I think I understood that essentially, as a sole trader I would be responsible for any liabilities and as a Ltd. company any liabilities would be held against the company.

I see two conflicting pieces of information here, the first being a reference to IR35 in the OP, which is completely irrelevant if you're a sole trader

The contract will be with my existing employer - I am full time with them at the moment but am leaving that role in a few weeks time - and I thought, possibly incorrectly, that I needed to worry about IR35 as it would be my only contract initially.

Do you have your own Ltd. company through which you work or not?

I was planning to register as a sole trader and not set up a Ltd. company until I was sure that contracting was the right thing for me. Suspect I will need to revisit this.

[moh00]

Darn, I thought NAT was asking a numpty question and it was open season.. Ah well.

Hey, I could well be any advice is welcome though

[cojak]

If you're working through your old employer, you'll need to go to an umbrella.

Call Lucy at Clarity (she's on this forum) - she'll be able to help.