about agents and umbrella companies

[Fungus]

Yes you can. The 5% allowance is to cover the admin cost of the the company. You can claim mileage and similar "employee" business expenses, you can claim pension contributions and a few other things before you take off the 5%. It's all laid out on the MHRC website and most accountants will have a summary and/or a ready reckoner that lays out each piece of the overall calculation.



You are paid a salary by the brolly and get dividends proportional to your shareholding. You are therefore employed by the brolly - loosely perhaps, but still employed. IR35 therefore does not apply. But then I haven't ever used one, not will I, so I'm no expert on their machinations.



So do I - there's more than one amateur out there. More fool them, then. Not knowing the rules is no excuse for not following them.



Well that's just b****cks and the first I've heard of it. It won't work anyway - the key IR35 pointers are D&C, MOO and substitution rights. Pretending to do project based work that can be directly broken down to hours worked is a waste of effort.

See what I mean - the legislation has been out there for 5 years now and people still can't be arsed to find out how it works. I'm not being snide (and I'm not aiming at you personally, I hasten to add), I just despair at the general level of ignorance over something so well documented and that is absolutely key to how we work.

Malvolio:

I have no problem with polite disagreement, but I don't think much of your rudeness and your bringing the 'discussion' down to the level of the school playground. And as for saying b****cks we all know you mean bollocks so what's the point of the *'s.

I checked on the 5% and it covers basic admin costs. It seems that you can also claim travel, subsistence etc in addition to the 5%. I think I need to have a little word with my accountant. (Not that I have any such expenses. But his printed documentation was wrong. What did I say about accountants?)

Sorry but you are mistaken about the brolly. The IR will investigate, and if they think that you are using the brolly as a tax evasion scheme, then you will be done for tax evasion. A brolly does not guarantee that you are outside of IR35. They will look at the complete picture. Anyone considering a brolly should get independent legal advice from an expert, not the brolly, and not you and me.

Here is a quote from <removed>

"Q: Can umbrellas avoid the IR35 tax?"

"A: No. The only way to avoid the financial impact of IR35 is to ensure your contract and working practices put you outside IR35."

The method of getting out of IR35 by bidding for work, rather than charging per hour, is not bollocks as you so crudely put it. It is used by a well known agency with well known clients. (The director of the agency made it clear what was going on but would not say "this is a fiddle". The finance director of a large well known company using contractors was aware of the scheme.) IR look at your overall working practices to decide on whether or not you are caught by IR35. The way that you bill is just one part of the whole picture. So charging by project does not automatically mean you are outside of IR35 but it helps. Working from home, having multiple clients, buying equipment such as a PC and the MSDN all help.

Incidentally if the IR conclude that you are knowingly evading tax, then they will fine you, in addition to requesting payment of tax due. That's why professional legal advice is important.

Part of the problem is that quite often someone cannot be sure that they are outside of IR35 as some high profile court cases have demonstrated. Sometimes even the finest legal experts in the UK cannot even agree.

Fungus

[malvolio]

OK, but that's actually about what I said. Hector will assume a brolly user to be inside IR35 and most of them will be paying the "fair" amount of tax anyway, which is ok becasue the brolly is a real business. It's people like me trying to run a non-expanding small company that are in the firing line.

As regards your accountant's crap advice, nuff said - except I repeat the point about being aware of fundemental business practice by yourself; advisers can get it wrong and there is no excuse for not having such basic stuff at your fingertips.

And I'm always rude and to the point: remeber who Malvolio really was - so bollocks to you too...

[boredsenseless]

Some agents will create schemes that are basically ways to evade IR35. For example, they allow you to bill for a block of work rather than on an hourly rate. You just have to make sure that the total cost divided by the number of hours worked happnes to match your hourly rate! That makes it look like you have tendered for a specific project, rather than simply turning up each day.

Leif

SO what happens to you if you overrun, do you run back to the agent crying or do you have to put up with the 'loss' out of your own pocket.

Under these sort of schemes how does the client extend you for an extra two days at the end of the engagement?

i.e. You have invoiced 20K for a product (which really was 70 days of effort just doing stuff each day). The client would like you to 'bum on seat' for another two days, do you get a contract for a small project or just two days?

Do people not realise that whats written on paper is meaningless the powers that be can look into the situation by interviewing the end client. They'll say - we paid X agent 250 a day for Y. The agent will say yes Y asked me to draw up a contract for the whole amount, as it cost the same amount I saw no issue in it.

Hey X and Agent are home and dry and Y is f@cked through their stupidity

[malvolio]

What "loss"? Stop thinking like a pseudo permie for a moment.

If you can sell a product - be it a PC or a developed and tested application or a deliverable in someone's project plan - you will need to cost it. Say you estimate 10 days at £300 plus 15% contingency, which is £3450, you price it at £3500 and that's what you agree with the client to do it for.

So you're good at your job and you do it in 5 days, you still get £3500.

Or you're sloppy and slow and you have to do it again taking 15 days altogether, you still get £3500.

It's called business. As long as you only thinking in terms of "hours of my time" = "money in my pocket", you'll never grasp the wider opportunities that are out there, especially for developers and other technical people. Admittedly, 90% of the time, we do hours worked for hours paid but that's no reason not to think like an supplier rather than an office temp. And the real way out of the whole IR35, pseudo-employee, agency-driven nightmare we have now is to start using proper business contracts, which means we have to start selling business solutions rather than slave labour. Although that isn't going to happen overnight (I wish!), we have to start sometime.

[boredsenseless]

I agree you can't make a loss on the terms you talked about unless you're really bad at estimating and you actually charge less than you need to pay yourself over the duration of the work.

I was thinking more of the position whereby you contract for a discrete item of work such as an application from scope through to delivery and charge a fixed fee but then have to employ people to deliver the product as otherwise the timeline is too long. In those cases losses are very real and need to be considered.

[malvolio]

Yes, very true. Of course, the hard-hearted might say you should have allowed for that, but it's not always possible to do so. It is another reason to break the job down into a set of deliverables (Product Breakdown Schedule in Prince2-speak), cost them individually and then you can discuss overruns and overspends on smaller pieces which might make the negotiation a bit more palatable to the client. Or not, in these hard times