Defining work inside IR35 as company work or not?

[zudecke]

Hi guys

Very ignorant to all this, so I apologise in advance, but I recently embarked on a contract for which I've been informed that there is a corporation tax element associated.

While I definitely expected this, I was left scratching my head as to WHY my company had anything to do with the engagement. The contract wording is between ME and not my company. I used a PAYE payroll company and have not invoiced anyone from my company during the engagement.

So out of curiosity, I wonder what part of such an engagement determines it as work via a ltd company??

Hope the question makes sense and apologies again!

Thanks,

Z

[malvolio]

It doesn't, actually....

first question - what route does the money take from the client to you, as in each step in the chain? If none of them are YourCo, then the CT question is meaningless.

ps. Ignorance is not an excuse. There's plenty of material out there (and on here) to fill in the gaps. Your job is being a contractor, so find out how to do it.

[zudecke]

It doesn't, actually....

first question - what route does the money take from the client to you, as in each step in the chain? If none of them are YourCo, then the CT question is meaningless.

ps. Ignorance is not an excuse. There's plenty of material out there (and on here) to fill in the gaps. Your job is being a contractor, so find out how to do it.

R.e. the route of money.
1) I submit timesheets each week in the end client's system (8 hours per day)
2) The end client pays the agency
3) The agency pays the "umbrella" payroll company
4) The umbrella pay me (personal account)

[malvolio]

R.e. the route of money.
1) I submit timesheets each week in the end client's system (8 hours per day)
2) The end client pays the agency
3) The agency pays the "umbrella" payroll company
4) The umbrella pay me (personal account)

So any CT due is nothing to do with you since you are not making any corporate profits and are being paid personally a normal PAYE salary.

At least, you ought to be. Have you compared your payslip (including any funny or unexplained deductions) to your personal account on the HMRC website. If they don't agree, then you have a problem.

And who is the umbrella company. Not all of them are totally trustworthy....

[WTFH]

I've been informed that there is a corporation tax element associated.

Who has informed you about the CT element?
Have they said how much CT is owed?
Who is your umbrella?

[zudecke]

Who has informed you about the CT element?
Have they said how much CT is owed?
Who is your umbrella?

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside. So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Payroll provider was a company called Parasol.

And I've triple-checked - there is nothing that mentions my limited company in the contractor or on my payslips, or anywhere else that I can see....

[northernladuk]

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside. So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Payroll provider was a company called Parasol.

And I've triple-checked - there is nothing that mentions my limited company in the contractor or on my payslips, or anywhere else that I can see....

You do know you are on potentially on the hook for a restrospective investigation going from outside to inside don't you? You are you ignorant to all that as well?

It's your job to know all this. The stuff you do at the client is secondary. As Mal mentioned ignorance isn't an excuse when this is your livelihood.

[WTFH]

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside.

How long were you in the contract before you switched to being inside?

So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Your accountant or your umbrella?
And were the invoices from you or your company?


...and you've not told us who informed you about the CT element.

[malvolio]

Let's just hope his personal payments aren't going into his company account...

Because an accountant would see that as company income on which there is a potential CT liability... and a lot of other crap to sort out.

[zudecke]

How long were you in the contract before you switched to being inside?



Your accountant or your umbrella?
And were the invoices from you or your company?


...and you've not told us who informed you about the CT element.

I was contracted via my ltd for 1 year, then I was asked to work inside IR35

I meant that based on the timesheets from the PAYE payroll "umbrella", FreeAgent was set up (via automation) to create invoices (which was how it was originally set up).

I think my accountant has just assumed that corp tax is owed then...