Reply to: Any Idea about sundaysolutions - Accountant Company

[Shabba]

Sunday

Hello,

I have gone with Sunday and they seem good so far. I have been told by someone that im on dodgy ground so am thinking about going ltd. Sunday are good becuase they take care of all the sh1t like liability insurance and you don't need a company bank etc. I think the law may have changed again though to target llps so i will prob sadly leave.

As for the 85% return that is cr4p. Like all of these things it may be possible to get it but you would have to claim massive expenses for that. I do around 300 miles a day so the milage pays me ok but if i were local then i would not be so well off. Also the sunday will submit whatever you like as an expense but if HMRC come knocking its upto you to provide the reciepts / log books / mot cets. so there is no free money.

I recently did a comparison with what i could get as a ltd and i think sunday give me about 300 a month more (on a 400 pd contract).. That is without fudging the expenses. I suppose the question i have to ask myself is 'is the risk of being investigated / sunday illegal worth 300 pm'... as i have only been a contractor for 4 months i am not too worried but had i done 5 years with them i would be scared.


Cheers

[ASB]

Yes they can. In fact, without YourCo, they are totally liable

There is another issue which can impact the client. In the event of a status enquiry in a S/E contractor-agent-client arrangement it is possible the contractor could be determined to be an actual employee of anybody in the chain - even without a contract beyond the agent. In this case an even larger bill can arrive because anything paid to the contractor is assumed to be net of all deductions.

[TheFaQQer]

Where does it say the AGENT can be held responsible? Did you notice AGENT is in big letters. That is the important word! The agent is not acting as an employer!

Surely it should be an EMPLOYMENT BUSINESS? Where is Denny, anyway?

[OrangeHopper]

Ok.

Yet again I'm wrong so I will now keep well clear of this forum in case I provide yet more inaccurate information.

Not sure why I got involved. Thought I had learned this lesson before.

Bye.

[Ardesco]

So let me get this right.

I say the limited is liable. You say the limited is liable.

I say the agent isn't. You now say the agent isn't.

Ok, I'll just continue being an idiot and hide in the shadow of your brilliance.

Your Ltd will be liable, but if you do not have a Ltd (i.e. you are a sole trader) the AGENT will be liable. Hence why agencies don't like working with sole traders.

Assuming that you are a Sole Trader, the end client won't be held liable for tax/NI that you do not pay because you don't have a contract with the end client, you have a contract with the AGENT. This is the main reason that contractors tend to operate via Limited companies and not as sole traders because agencies generally speaking won't touch a sole trader with a tulipty stick due to the potential liability.

Have a read through what malvolio has said again, he is bang on the money, you just don't appear to be comprehending what he has said.

[malvolio]

Fronm your earlier post, that I tried to answer...

Agencies don't generally care about your arrangements because they can't be held responsible for any taxes you may owe.

Yes they can. In fact, without YourCo, they are totally liable

You can't work as a sole trader because an IT contractor does not fit into the definition of a self-employed person.

Yes they can, but agencies won't deal with them.

If the IR thinks you aren't self-employed they can demand the difference in NI from the client, hence the client's reluctance to engage you as a self-employed person.

You don't have a contract with the client. They are not liable unless you are engaged directly by them, which isn't what you were arguing about.

I give up, I have better things to do with a Sunday afternoon in the rain.

[OrangeHopper]

So let me get this right.

I say the limited is liable. You say the limited is liable.

I say the agent isn't. You now say the agent isn't.

Ok, I'll just continue being an idiot and hide in the shadow of your brilliance.

[malvolio]

Sorry but that doesn't answer my question.

Where does it say the AGENT can be held responsible? Did you notice AGENT is in big letters. That is the important word! The agent is not acting as an employer!

Composite - yes.
Umbrella - yes.
Limited company - yes.
Client (as last resort) - yes.

Agent - no.

At one time is was self-employed or limited. Clients could be liable if you went self-employed but the IR thought you weren't. Hence clients wouldn't touch us unless we were limited.

God, this is hard work.

No it's not, it's just you aren't listening.

Your contract is with the agent (sorry, the AGENT), not the end client. And it's nothing to do with employment at all.

S134c was brought in specifically to close a loophope and prevent an SE worker not paying taxation and leaving nobody liable: HMG didn't like that so put the liability on the next legal entity in the contractual chain, which would have been the agency but is now YourCo.

So I'm sorry if you don't believe me, or can't be arsed to go look it up yourself, but them's the facts.

[OrangeHopper]

Sorry but that doesn't answer my question.

Where does it say the AGENT can be held responsible? Did you notice AGENT is in big letters. That is the important word! The agent is not acting as an employer!

Composite - yes.
Umbrella - yes.
Limited company - yes.
Client (as last resort) - yes.

Agent - no.

At one time is was self-employed or limited. Clients could be liable if you went self-employed but the IR thought you weren't. Hence clients wouldn't touch us unless we were limited.

God, this is hard work.

[malvolio]

Malvolio, I'm so glad there is someone on here that knows everything.

... it's the agency that's potentially liable, not the client ...

So that I may be educated by the master, please point me at the relevant source.

This is a basic point of law controlling how and why we have Limited Companies. If you don't understand that, fine, but I suggest you go search for s75/77 of ITEPA on HMRC's website, which is the latest edition covering what was originally S134c of the Finance Act and read it for yourself. Eventually (it's not exactly light reading) you will come to the answer I gave.

[cojak]

Was sent this as an example of the risk I'd be taking if I went Ltd and then got investigated:....

Sent by whom? Sunday Solutions?

They're trying to scare you into joining. I am not impressed by the bully-boy business model, but it does seem to be working for them.

There is no more risk being Ltd - indeed there is less risk as you don't have some middle man between you and your money. Ask people around here about companies going bust and the £1000's owed suddenly disappearing.

All you need to do is:

1) Go Ltd;
2) Get a good accountant (who do 1. for you for a nominal sum);
3) Join the PCG (Plus subscription) that will sort out any HMRC investigations for you.

And that's it...

[bellymonster]

Ruth, I've tried the LLP solution. Trust me, it aint the magical solution that they make out. I was with a company called Contracting Solutions and they promised as high as 85% returns. But this really depends on how much in the way of expenses you dare to push through. In reality I think I was nearer 65%.

I was new to contracting and a bit wet behind the ears, but I soon caught on and switched to my own Ltd comp within 3 months. From that point on I've earnt more, without taking the p*ss on expenses, and feel more in control.

Even Contracting Solutions realised they might be on a sticky wicket with agencies and canned the product in favour of Ltd comps.

[OrangeHopper]

Malvolio, I'm so glad there is someone on here that knows everything.

... it's the agency that's potentially liable, not the client ...

So that I may be educated by the master, please point me at the relevant source.

[ruth11]

Was sent this as an example of the risk I'd be taking if I went Ltd and then got investigated:

Judgement was handed down last Friday in the much-vaunted IR35 High Court case of Synaptek v IR, also known as the Stutchbury case.

Mr Stutchbury had originally been ruled to be within IR35 at the General Commissioners and had appealed to the High Court to contest this view. The Court found in favour of the Revenue, confirming the original ruling that IR35 did apply to the arrangements between Mr Stutchbury and his end client, EDS. The contractual arrangement was complicated by the fact that there was no direct contractual relationship between Mr Stutchbury’s company Synaptek and EDS, as Synaptek’s agreement to provide services was made with an agency, NESCO. EDS was itself providing services to the Benefits Agency at the Inland Revenue as successor to the Government IT Services Agency, which was the end client of Synaptek and NESCO during a previous period.

Mr Justice Hart emphasised throughout that it is not for him to decide the deemed employment status of Mr Stutchbury, merely to decide whether the General Commissioners had erred in law in their original decision. He has not therefore given any additional guidance as to the relative weight of the different status indicators, but it will be useful for contractors to be aware of some of the salient facts about the engagement. The Judge summarised the factors in this case that pointed to a “contract for services” (deemed self-employment) as follows:
 Synaptek/Mr Stutchbury was “in business on its own account”. This was demonstrated by substantial investment in the company; a varied client base both historically and during the currency of the EDS engagement; Synaptek had in the past engaged a total of four to five employees.
 EDS only had “limited control” over ‘how’ the work was to be performed, or specifically ‘when’. The Judge did not particularly refer to the limited control as to ‘where’ the work was performed – this was one initial location subject to change by agreement with the agency.
 Contract contained a “right of substitution”. This was stated as a factor for deemed self-employment even though both parties had accepted that Mr Stutchbury personally performed services. The actual clause in the agreement was negatively worded and required the unqualified consent of EDS. Mr Justice Hart stated: “the effect of the contract is that, unless and until agreed otherwise, the services do have to be performed personally by Mr Stutchbury”.
 Synaptek was “responsible for training” for its representatives and provision of computer facilities at its own premises.
 Intellectual Property Rights had to be assigned to EDS, rather than already vesting in EDS as would be the case for EDS employees.
 Synaptek was required to maintain “professional indemnity insurance”.
 Synaptek/Mr Stutchbury had “flexibility of hours worked”.
 Synaptek/Mr Stutchbury brought in its “own reference books” whilst on-site. This was stated as a factor for deemed self-employment even though Mr Stutchbury did not use any of his (or Synaptek’s) equipment on-site specifically to perform the work.
Conversely, the Judge summarised the factors in this case that pointed to a “contract of services” (deemed employment) as follows:
 Minimum 37.5 hours per week required, broadly equivalent to a “normal working week”.
 The only risk borne by Synaptek/Mr Stutchbury was the risk of insolvency of the agency or EDS. This point is of interest as there are other facts that suggest that there was more risk than was identified by the Judge. For example the Agreement could be terminated with immediate effect if the services were not performed to the satisfaction of EDS.
 The duration was for a “fixed period” of six months rather than being linked to completion of a particular project. This emphasises the need for a genuinely project-based contract rather than merely ‘time and skill-set’.
 Mr Stutchbury worked “alongside EDS employees” and was sufficiently integrated to have an EDS line manager.
 The contract required “compliance with all instructions” of EDS. It is important to note that there was no subsequent mention of the other parts of the respective clause in the Agreement, which also referred to on-site rules, procedures, policies etc of EDS.
It is interesting that, although mutuality of obligations was not stated as a specific factor for or against a contract for services, it was examined in the judgement. The particular clause in the agreement that had been relied on by Synaptek to exclude mutuality of obligation read as follows:

“6.4: In any event no payment will be made by NESCO to the Company in respect of any contractual period not actually worked including notice periods.”

The Judge contested that the clause served merely to emphasise that payment is dependent on actual work having been done, and does not detract from a separate clause (4.3) requiring the agency (and through the ‘hypothetical contract’ requiring EDS) “to allocate work to the Company”. The Judge also highlighted the often-misunderstood key distinction between mutuality of obligation during the currency of the contract, and mutuality of obligation between contracts. The Judge effectively considered that there must be an obligation on the agency/EDS to provide work during the currency of the contract, as otherwise the various termination provisions could serve no purpose.

The decision is a blow to many contractors who may believe that they are outside the scope of IR35 and once again highlights the importance of the actual arrangements being properly reflected in appropriate contract terms. The decision confirms the importance of properly drafted ‘project-based’ contracts as a means of legitimately avoiding IR35. It also counters advice given by some advisors that all that is required is for the contractor to be ‘in business on his own account’ - a theory effectively rejected by the Court. The underlying principle remains true that, given the complexities involved, the only security a contractor can gain is to have proper legal advice from the outset on how to operate, matched with a proper commercial agreement.

There is no simple shortcut around IR35, and the current lure in some quarters for contractors to seek comfort from completing a simple question and answer form is simplistic and dangerous in the extreme.

[philip@wellwoodhoyle]

They told me some scary stuff about the next tax return form having some extra direct questions on it (abotu whether you own your own company and how much you've paid yourself in Divis) and your answers are likely to automatically put you on the radar for IR35 investigation.

Just more scaremongering from HMRC to try to coerce the ill-informed to accept IR35 etc. It is already blatantly obvious to HMRC those who are running their own company etc. The employment section has two "tick boxes" already to confirm you are a director and controller. That together with a relatively low wage and relatively high dividends makes it obvious - HMRC would have to be incredibly thick not to be able to do a computer database search on those criteria to come up with a list of potentials. Then they can use their PAYE database to check for any other employees of the same company, then use the Corporation Tax database to see what the company accounts show. They DON'T NEED any more questions to work it out - it is all there on a plate for them IF they really want to start looking at more contractors than they do at present. The proposed questions won't help those contractors who are evading/avoiding tax by offshoring, using EBT, using loan schemes, using composites, or just not declaring anything at all. The proposals have no effect - they are there just to try to get more people into voluntary not paying the low salary/high dividend option, and more people into believing IR35 applies when it doesn't.