Reply to: New Contractor seeks Urgent Help!

[yeahrite]

good tip

nice tip - thanks

[philip@wellwoodhoyle]

since accountants will charge VAT, I guess it is worth me resgistering for VAT as well ?.

You could always go for an accountant who isn't VAT registered! Now that a lot of contractors are in the VAT flat rate scheme, the VAT charged by the larger accountants is an expense and is not actually recoverable anymore. Find an accountant who isn't VAT registered and you're effectively making a saving of the VAT.

[Lucifer Box]

Is this some yellow stuff they send via the post, I have not got round to reading or opening the letter yet.

Can i backdate these payslips fro the last 2 months to give HRMC

Is it Illegal for me not to submit one if I dont pay myself in any month ?


css_jay99

That's the johnny. They don't care what's on it as long as you send it in every month. If you leave it much longer you will probably get a letter or phone call asking you why you aren't returning them (I did). As I said, if you haven't run the payroll or paid yourself, still send it back, just do as the Master suggested and put zero on it.

Your only legal obligation is to pay the PAYE for the year by 19th April, but don't rock the boat, just send the slip in every month. Make a recurring appointment in Outlook to do it every 13th (say).

[css_jay99]

The one thing HMRC don't like is not getting the monthly PAYE slip but if you haven't run the payroll just send it with zero on it.

Is this some yellow stuff they send via the post, I have not got round to reading or opening the letter yet.

Can i backdate these payslips fro the last 2 months to give HRMC

Is it Illegal for me not to submit one if I dont pay myself in any month ?


css_jay99

[The Master]

It's your Ltd so you decide when the staff get paid. If they don't like the fact that you only pay them twice a year (or whatever) I'm sure they will vote with their feet.

The one thing HMRC don't like is not getting the monthly PAYE slip but if you haven't run the payroll just send it with zero on it.

[css_jay99]

Because I have not sorted what I going to do about accontant/bookkeeping I have not paid myself.

So up to date I have been contracting for the last 2 months with my Ltd Co. and my Co. has been paid. because I have not got round to sorting out accountant/PAYE, i have not paid myself.

the question is, Am I in trouble with IR or is there a time limit to which I have to sort all these out. i guess i can also pay my self more money in one month to account for all the months I miss payment.

The second query is, Do I have to alway do PAYE for myself every month ?


cheers !

[Mustang]

Contract review

Suggest you pay someone like B&C to do a contract review - will take out the worry.

[css_jay99]

the more reading I do the more confused I am.

My current contract is via a permie friend (rather thank an agency) to do a project at his employers's site.

Looking at the contract(btw both of us), he agrees with me that I am not caught by IR35. While I am under a deadline to deliver, I still decide on how I go about development irrespective of the Business requirement documents.


err, i dont have insurance. I guess i have to look into this !

malvolio, i dont understand what U are saying about notice periods. any idea where other than hmrc.gov.uk that I can do more research ?



xoggoth, you said you do your accounts yourself, any pointers you can give?

what software do you use. was thinking of buying Sage instant accounts but I dont like their Sage Instant payroll

[xoggoth]

I do all mine, but only because accountants are such a useless lot. If one existed that was any good that I could just throw a shoebox full of receipts and invoices at I probably wouldn't bother, it's dead boring.

[malvolio]

Sorry,m you need to do a bit more reading yet.

The control test is that they tell you exactly what code to write from the functional spec, how to construct logical loops, where to add comments, what naming conventions to use for variables...If however they say "Write me a functioning program to do this to our quality standards" and leave you to it, you are not caught.

The other two are:

Substitution clause - do you have one that is not so tied down it can never be invoked? You don't have to invoke it, and the client might be able to have a say in how well qualified your proposed sub can be, which is fair, but they cannot have an absolute veto.

Mutuality - if they have no work, they can send you home without pay. If you do no work for them, you don't expect to charge them for it.

There are a couple of other strong pointers, like assymetric notice periods (hint: you don't want a notice period from your side) but if you have any one of the above you can probably assume you're out of IR35 and someone like Accountax will happily defend you (erm, you do have insurance, I take it?)

Hence my constant assertion that IR35 is voluntary. The only people that are caught by it are the terminally lazy or the terminally ill-informed.

[css_jay99]

Cheers,

Ok from what I am understanding,

1) When using a brolly Co.
Bcos they operate PAYE, you never fall foul of the Taxman.
Additionally, if income is caught by IR35 then at least I save on paying Employer NIC (had it passed via my Ltd Company)

2) when Using my Ltd Company
Pass only services that are Definately not caught by IR35. Then pay it as Dividend (after Corp tax )

If it is so simple why dont brolly & accounting companies tell you that, instead of dumping tons of pages of their interpretatuion of IR35 on their sites and telling you lies of how much they can save you !

While I now understand the purpose of IR35, the test to check you are caught by it still seem unjust.

Take for instance, "IR35 might not apply to you if your client does not dictate how to do the job" . If that is the case them A lot of IT contractors will definately be caught by IR35, afterrall most of us developers work from functional specs and designed documents most probably created by the client or other contractors. Also you still have to adhere to their development guidelines.

The other thing (even if in you contract) that you can use a substitute to do the job. I am sure most clients will fire someone if they even sugested it considering, it is you who went for the interview not a substitute !


Any one heared of Carrington accountancy ?


css_jay99

[The Master]

The 5% is a flat rate. You do not have to justify the expense.

[expat]

Does it (IR35) also mean (appart from travell expenses) I can deduct a Flat rate 5% Expenses?

No: the 5% is an upper limit, not a flat rate. You still have to justify the expenses.

[DaveB]

since accountants will charge VAT, I guess it is worth me resgistering for VAT as well ?.

I still need recommendations on cheap & good IT accountants

Having done more reading on IR35, it looks like a very good majority will be caught by this even me I think ?

If thats the case, does that JUST MEAN I have to account for employers & employees NIC. Does it also mean (appart from travell expenses) I can deduct a Flat rate 5% Expenses

I guess we all have the pay the piper one way or the other.

I am almost thinking of running back to perm !!
thanks

css_jay99

Yes, register for VAT and get on the Flat Rate Scheme. It will save you money. Being registered for VAT also improves your standing as a legitimate business in your own right. A good accountant can tell you all about it.

IR35 is a state of mind. If you belive you will be caught then you will be. If you belive you arn't, contrary to what the IR will have you belive most peolpe arn't, then make sure the paperwork matches, it's not hard. Join the PCG and get their model contracts to work from ( As well as the free insurance ). Most decent agencies will be happy to tweak contracts to ensure IR35 is passed, just ask them to.

The most important part of IR35 though is your working practices. If you are just another bum on a seat being micromanaged and with no say in how you perform your contracted services then you are buggered.

Work to make sure this is not the case and you should be fine.

Yes we all have to pay the piper, the tight scots git. Best thing to do is just do it and dont try and take the piss. Taking the piss gets you noticed and that gets you in court.

And once you get your first contract you will wonder why the hell you didnt do it years ago. Yes the tax system is a pain, but you will earn more money, you will have more control and you wont have to worry about the endless round of pay / performance reviews, office politics and back stabbing, climbing the greasy pole and why what bastard in the op's team got promoted and you didnt.

Oh, and as for an accountant I use SJD others use Darren at 1st Accountancy - No URL cos I could'nt find it in a hurry. There are others.

[Denny]

since accountants will charge VAT, I guess it is worth me resgistering for VAT as well ?.

I still need recommendations on cheap & good IT accountants

Having done more reading on IR35, it looks like a very good majority will be caught by this even me I think ?

If thats the case, does that JUST MEAN I have to account for employers & employees NIC. Does it also mean (appart from travell expenses) I can deduct a Flat rate 5% Expenses

I guess we all have the pay the piper one way or the other.

I am almost thinking of running back to perm !!
thanks

css_jay99

The only time it's worth going limited is if you are set to earn in excess of £30K (although this figure varies, depending on who you talk to) and your contract terms and working conditions sit firmly outside of IR35. That means you can legitimately pay yourself a small salary and take the rest as divis which don't attract any tax until your fees reach the 40% tax bracket. In any even you would have to pay corporation tax on the divis you do take out, but that is a lot less than paying out lower level tax and NI contributions.

If you have your own limited, but are caught by IR35 then you will have to declare all your income as salary and NI caught and still pay employers and employees NI. Divis will be regarded as tax avoidance/evasion - call it what you like. Going through a PAYE brollie is not much better, in my opinion.

If I think I am going to be caught by IR35 then I just route my work through a brolly that has set me up under him as a sole trader. This is unusual and most agencies won't allow this - but my brolly keeps it quiet and signs all the forms anyway so that the agency are satisfied. Doing it this way means I get paid gross, pay tax via SA at the end of the tax year (after keeping the money in a high interest account) and I don't have to pay employers NI. Far the best and cheapest way to be IR35 caught.