Reply to: Time allowed from the first invoice and business registration

[Riccardo]

I'm a bit late because I was in Italy: thanks for the info and your patience.

[ASB]

Riccardo,

There is nothing to stop you:-

1) Being self employed, declaring that information and associated income and expenses on your self assessment tax return.

2) Incorporating a company if/when you need it. You can work through this company as required.

Obviously there and implication of both but you can do them both. Lots of people have more than one job, do some self employed work etc. However if you are genuinely self employed then your overall tax burden is likely to be lower through route 2.

Equally there may be occasions when some of the work you do through your company is "ir35" caught. This has implications in that it must effectively be paid as salary rather than dividends which increases the tax take.

In terms of a NINO I do not believe your wife will actually HAVE to have one. But it seems likely that pretty soon one or the other of you will do something which requires here to get one. You should be able to fit this pretty well to your specific circumstances:-

HM Revenue & Customs: Applying for a National Insurance number

[Riccardo]

Thank you ASB, I appreciate your reply very much because it's the most comprehensive I've heard here.

Also, use of the word "bleat" was possibly a bit harsh. The fact is that people have tried to explain the situation, it is obviously not as you expect, and different from that you are used to. It's the way of the world.

I don't know why, but it seems I give the impression that I don't accept new rules and I'm complaining something because I don't like it, is it? If that's the case there's something wrong in the communication, and that's confirm I'm right not to try to trade in the UK ahead of time.... where "time"=comprehension not only of the english language/accents, but also of the english mentality. You can't imagine how far is the english language from the italian one. It's a very hard work. Every phrase is an adventure!

I write a lot trying to cope with misunderstandings using short sentences giving a better explanation, but probably it doesn't work very well.

I must highlight that I'm interested in everything, everyone of you say, (even the insults are appreciated because I learn how to do the same! ). Do you remember the Robot of the movie "short circuit" saying "input! input!"? That's me! I'm here to learn.
I'm sorry someone takes my words as a lack of respect, bleat, and so on, but really my questions are pure interest on things.

By the way, how could I complain something if I'm not involved in the problem?
I have the impression that it's not clear (but in this case I think that's not my bad because I've written it down 1000 times in this thread) I don't have to chose ltd vs s.e.

I'm only surveying/investigate because someone in the first posts expose the problem and caught my attention on this subject... that is not what I was asking for but it is however interesting to know.

At worst I could doubt that someone speaks really knowing what he's talking about, but I can't complain anything because I'm not in the situation for which X or Y makes any difference for me (maybe in the future).

Let's explain me the situation even better: If an english company ask me to do something, 99% I'll refuse that because I have no time. So ther's no problem for me about what a UK company think about self-employed. I'm interested on this topic only for knowledge.

If I doubt something, it's only because I want to know more nto because I dare you or something similar. Don't forget I've been analyst and developer for 35 years and I was making software in assembler language when I was 9 adn I've spend zillions of hours alone with computers, so my brain it's quite altered by my profession and it has a different view of the world. I'm not easily satisfied with vague replies the same way you can't satisfy a computer telling it "Please make some additions".

That's why this thread to me looks like
guy: "The addition has less problem"
me: "What kind of addition?"
guy: "The addition using the symbol +"
me: "with which number?"
guy: "some numbers"

and to other looks instead like
guy: "the addition has less problems"
me: "what kind of addition?"
guy: "You bastard don't believe me! Go back to Italy!"

It's only a problem of communication, not only because I write a bad english but mainly because the same "territory" has a different "map" for us (NPL).
Add the problem of my personal need of lots of details, and we have a big problem.

Replying to me vaguely could result in 200 years of answer and reply.
I realize that, and for counterpart sake I generally stop questioning to avoid problems (like the ones are arising here).
You have a lower threshold so I must adjust the number of time I can ask and ask and ask again.... or accept of being insulted as I sign I have to stop asking.

However, asking for details do its job because your reply is miles away from the first replies!

Various pointers will help. e.g. fixed price work. Substitution. Multiple clients.

OK, so basically the more one is far from being framed as a hired person, the best.

As it happens, I believe an individual should be able to provide self employed services with no real restrictions.

OK

But the odds are stacked against you. If you get approached by a large company they are likely to be nervous about you being self employed. If it is a small company, likely far less so.

OK. Point taken.

You may also use some sort of agency; in the middle of the client chain. There are, in effect, pieces of legislation that will outlaw self employed -> agency -> end client.

OK. I have a relative that was an important figure at the IBM (he worked even at NASA) that do the kind of service you're talking about. It's a human resource management company that work even for Microsoft. I did his website many years ago.

When I am working in various different parts I expect to have to abide by their rules and practices - even when they are different from those I am used to and don't fit in with I traditionally do.

Obviously, I agree 100% and I'm very, very sad and sorry I don't give that impression because I'm willing not only to be resident but to become a UK citizen, and more than that, I'd like being able to send and receive thoughts and emotions the right way.

I do wish you luck though

"though"...

Some of these might prove helpful

Thank you so much to you and everybody.


Extra business help
Since It's a question not business related, I don't open another thread for this.
If someone has time to reply will be very appreciated as usual.

(1)
If my wife don't work and don't need to find a job because at the moment is in full immersion studying english (differently from me she starts really from scratch), is it usefull for her having a NINO?

(2)
Has she to compile some form, make some self assessment, etc. to state she has no income or that's the default?


See ya!

[ASB]

Riccardo,

The problem with your analogies is about risk. And the risk falls onto the buyer.

It is compounded by the fact that you are selling services not goods and services.

So, you knock up a website for me. The possibility exists that HMRC could view that as an employment type relationship. Peruse HMRC employee status manuals.

If this were to happen then the fall out from that would rest with me. I could, potentially, be assessed as liable for tax on that. The amount paid would be viewed as a net salary payment.

There are also regulations which do - under certain circumstances - allow for the transfer of liabilities. However, these are only normally effective in very limited circumstances (in your case, assuming you have done self employed work then it is unlikely they would be attempted). But the risk would be trying to interpret the arrangements the services were provided under as an employment relationship.

Now, I don't know how you get your work. But, the fact remains, that as a result of this, a lot of companies are reluctant to use the services of self employed individuals. Particularly where they are large chunks of work, rather than a quick fix.

It is the crossover between personal service being required and engaging a firm to do a job that causes the issues. Another issue is who is controlling the relationship.

Various pointers will help. e.g. fixed price work. Substitution. Multiple clients.

As it happens, I believe an individual should be able to provide self employed services with no real restrictions. You do genuinely sound like you are trying to build a client base etc.

But the odds are stacked against you. If you get approached by a large company they are likely to be nervous about you being self employed. If it is a small company, likely far less so.

You may also use some sort of agency; in the middle of the client chain. There are, in effect, pieces of legislation that will outlaw self employed -> agency -> end client.

Also, use of the word "bleat" was possibly a bit harsh. The fact is that people have tried to explain the situation, it is obviously not as you expect, and different from that you are used to. It's the way of the world.

When I am working in various different parts I expect to have to abide by their rules and practices - even when they are different from those I am used to and don't fit in with I traditionally do.

I do wish you luck though (and by the way if you incorporate a company and operate through that the probability is that you will pay less in taxes etc overall than if you were self employed).

-------------------------------------

Some of these might prove helpful, but the basic problem is that you can't say (as somebody engaging you) "if the contract says A, B, C then you will be self employed". Only that you might be. HMRC always has the power of challenge and consumers of your services may not be keen to take on that risk.

http://www.hmrc.gov.uk/employment-status/
http://www.hmrc.gov.uk/manuals/esmmanual/esm7009.htm
http://www.hmrc.gov.uk/manuals/esmmanual/esm7000.htm

[DirtyDog]

16

[Riccardo]

Drop the analogies. They do not really correlate.

So, can you explain a practical scenario?

It is broadly the case that liabilities cannot be transferred up the chain. However there are ways and it is minor risk. Fraud and collusion would do it.

This is completely another problem. It's more like talking about a self-employed that kills a person and his friends can expect to be interrogated by the Police. That's quite normal. The same about fraud and collusion. That's the same in Italy.

However being self employed is not a matter of saying "I am self employed, this work will be 1,000". It is a matter of the work etc that is done. The conditions it is done on and a variety of similar things.

??? Sorry, it's too vague for me, I can't understand what are talking about.

The problem that arises is that in the event of these being failed you will be regarded as the clients employee and they will be taxed accordingly.

Under what specific circumstances I'll be regarded as the employee of a client?
If the plumber come to my house becomes my employee? I don't think so.
I think it's not even a problem if I sell a software package or a website, or a service on a website, etc.

The problem you're talking about without examples, I suppose, could probably arise in cases more similar to being hired, e.g. the outsourcing (?).

There are also pieces of legislation that prohibit people providing services on a self employed basis.

What legislation? Can I have a link or law articles?

Now you can bleat as much as you want about it. And the fact that it differs in Italy. You can complain it impinges your right to free movement etc.

I'm not complaining a tube! How do you say in english: "I don't care it's not my case, we are just talking"?
We are talking of ltd/S.E., only to exchange information and only because someone introduced the problem, NOT ME. It's just for curiosity.
That you call bleat is normally called intercultural exchange.
If you read the title the question it's not about differences with Italy, differences about LTD and S.E., etc.. I didn't introduce those other problems BUT I'm interested anyway for curiosity and for the future.
We started to talk in a civilized manner about the subject, even if it's not something that involves me directly (for now). Is this a problem for you nervous system?

I'm interested in every pro and cons for a future choice so, since you're speaking about bleat, if you can links laws and facts instead of rumors and theory it will be very appreciated.

Kind regards!

[ASB]

Riccardo.

Drop the analogies. They do not really correlate.

It is broadly the case that liabilities cannot be transferred up the chain. However there are ways and it is minor risk. Fraud and collusion would do it.

However being self employed is not a matter of saying "I am self employed, this work will be 1,000". It is a matter of the work etc that is done. The conditions it is done on and a variety of similar things.

The problem that arises is that in the event of these being failed you will be regarded as the clients employee and they will be taxed accordingly.

As a result of this clients can be reluctant to use self employed people because of the risk.

There are also pieces of legislation that prohibit people providing services on a self employed basis. Largely where there are intermediaries involved.

Now you can bleat as much as you want about it. And the fact that it differs in Italy. You can complain it impinges your right to free movement etc.

Or you can accept that this is what happens in practice.

[Riccardo]

HMRC can go up the chain to get that money back. That means that your client and / or the agency (assuming one is in the middle of the relationship), opens themselves up to being liable to pay your taxes if you don't.

Admittedly that's quite weird! It sounds pretty italian: are you sure there are no italians in the UK parliament?!
You are saying that if
- the company X ask me to do a software,
- I make it, get payed, and say goodbye.
- Company X starts selling that software branded with their name
- I don't pay taxes
- HMRC ask that company X for my taxes?

Or

- Company X ask me for a website
- I do the website
- Payment + Goodbye
- Tax day: I don't pay taxes
- HRMC ask my taxes to my customer?

Or

- I call a plumber
- The plumber don't pay taxes
- HMRC ask his taxes to me only because I had a pipe repaired from him?!

Naaaaaa! I can't believe this. I trust you but I can't believe it. This will overtake Italy of a mile about bull..it!
England can't beat Italy in nonsense so easily!
If this is true, I bet HMRC is ruled by an italian guy! NO DOUBT! Maybe you don't know but Tremonti, Monti, Berlusconi, etc. are ruling the UK!!!

In Italy the only responsible is the firm/company who has the problem, not the chain. The customer is untouchable, B2C or B2B.

It's not a question that you would generally expect to be asked before you even know whether you are going to engage someone - it's something that you deal with at the point of contract.

They don't care at all, I am 100% sure because 99% of the request are aimed to individuals, in some cases even without a business.

PS: In Italy now it's even simpler: a new law let you sell for billions of euro without having any business if the earnings are based on pure copyright. So if I make a software, I give the right to sell to any kind of company and they sell it in millions of copy, I can have a profit of billions without even having a business, VAT, NOTHING. I only have to pay taxes. And obviously, if I omit to pay taxes, the agency is not responsibile for anything because they are responsible only of their taxes. So I'd go to jail and they will continue to work without any problem.

I think people can realize without big effort that it's less safe to work with a sole-trader who may not pay their taxes and a government which expects your company to pay up if they don't pay correctly.

Obviously if what you said above it's true, and surely it is, will explain why people don't like the self-employed.
But I find it too surreal to be true.
This information could be a Christmas present to italian companies: it gives a bit of relief about being an italian company! At least 1 thing in Italy would be better than here.
It could explain why taxes here are so low: they always found a scapegoat!

This may be even more true when dealing with someone who is not a UK citizen.

Do you mean e.g. UK-->Italy, selling overseas? An italian (or other nation) company who RECEIVES a service from a UK self-employed is completely alien to the HMRC taxes, not being subject to UK laws.
If a uk self-employed make a work or sell something in Italy, then he doesn't pay taxes, you can absolutely forget that HMRC can claim those taxes in Italy to his customer. They could try but the claim surely will be "archived" in an italian toilet.

If you are right, then it's not a problem as all; if we are right then you won't be able to work as a supplier to many, many organizations in the UK.

It's not a matter of being right or not: you are surely right even if I find it hard to believe that UK is worst than Italy on this regard.
I didn't know that, and it would explain why the ltd is preferred over self-employed.


However I highlight again that for at least 1 year I'm 100% sure (maybe even longer... maybe even forever) I can't even think to sell in UK for many reasons, including:

- language. Not only I have to learn english, I also have to learn northern english that doesn't even sound like english (I live in Wigan. My postman speaks like a Viking with sentences like: "Tha mornt gerront buzz bart payin, tha mon gerra tikit an sit thi darn" The first greeting of a neighbour was something like: "Alreet!" or "yolreet" that after some research I discovered it means "All right? or "You all right?". However generally is a more "standard": "Hiya!" or a "how's-it-goin--yolraaaaaaa?). So it's a hard work here!

- I have lots of works to finish (The work before what I'm doing now lasted 2 years for a single software. I'm now working on another software and 8 months have already passed. The time flies away: 1 week looks like a day. I have to do other works and then I have to renew some of my previous softwares).

If you can find someone who will take you on as self-employed, then that's great - no-one here is forcing you to go umbrella or Ltd, we're just trying to make you aware that insisting that you will work in the UK as self-employed will inevitably rule you out of working with many, many organisations.

I'm sure you're right (my doubts are... virtual... in the sense that I only find difficult to believe that strange rule) and surely when I'll be ready to trade with UK companies I'll end up with an ltd. But now it's useless. It's more complicated for nothing. I don't need to be trusted by UK companies. Now I only need the simplest and quicker way to comply with the law and pay taxes. Nothing more. In the future I'll pay someone of you to help me with the ltd.

If you are in the UK and working in the UK, then make sure you understand the taxation situation carefully if providing services to clients around the world

I know that. More than UK laws the problem is about EU laws, including strange things such as paying VAT in the target nation over a threshold. Fortunately I am part of some privileged categories and I can sell without such problems, paying taxes only in the UK.
However I have an accountant in Italy for these problems. Lots of things that I've read on UK forums are completely wrong or misunderstood or don't apply to Italy despite it's still EU.


PS: in some posts I've used the word "On commission" because it's similar to the italian word "Su commissione", but I think It's a false friend because I think in English it means having a percentage of the revenues. Probably the exact term is "on order"(?). I mean: Instead of making a software and selling it to everyone, I make a specifically for that company as they ask me to do. It's something similar to outsourcing but not necessarily I give them the source code. I get paid before, during and after the work is done.

I'd be surprised if self-employed worked out much better for you than being outside IR35 through a Ltd, taking low salary and dividends, and then looking at an MVL if you want to close the business.

I have no idea what are you talking about. IR35 sounds like a NASA satellite searching for planets in the infrared spectrum!
I'll see for that in due time. If I do it now I risk only to waste time because laws change.

[DirtyDog]

One final thing to add - have you looked into the financials?

I'd be surprised if self-employed worked out much better for you than being outside IR35 through a Ltd, taking low salary and dividends, and then looking at an MVL if you want to close the business.

[DirtyDog]

I find it difficult to think that this country is so backward as depicted by cojak and confirmed by DirtyDog. I find it difficult to believe that brits still believe in that false flag and avoid self-employed as the hell on earth because:

Let's start there. The tax legislation in this country means that if you are self-employed, and fail to pay your taxes, then HMRC can go up the chain to get that money back. That means that your client and / or the agency (assuming one is in the middle of the relationship), opens themselves up to being liable to pay your taxes if you don't. For that reason, many companies will not deal with a self-employed person and prefer to deal with a Ltd company where they know eh yaren't opening themselves up to paying your taxes for you.

It's nothing about being backwards or forwards, it's about minimising their risk with regards to your personal taxes.

1) I had an offer from a company in UK while not yet in UK and despite they knows I was going to start as a self-employed

Good luck with the job.

2) I'm part of PHP classes and I receive weekly many requests for work from all over the world, UK included. I've already deleted the last one a couple of days ago, from a company in London. Nobody ask "Are you an ltd or self-employed?". They only ask for skill.

Have you got as far as agreeing a contract with the company involved? It's not a question that you would generally expect to be asked before you even know whether you are going to engage someone - it's something that you deal with at the point of contract.

3) I think people can realize without big effort that it's safer a sole trader who is responsible personally and can lose his home, then an ltd company who risks nothing other than simply run out of business.

I think people can realize without big effort that it's less safe to work with a sole-trader who may not pay their taxes and a government which expects your company to pay up if they don't pay correctly. This may be even more true when dealing with someone who is not a UK citizen.

Nothing bad happened switching from company to self-employed... on the contrary: people don't care at all.

Clients and agencies in the UK WILL care though - the important thing is that by not working through an umbrella company or through a Ltd company, you are opening the agency / client to paying your taxes for you.

I don't know what kojak is talking about, but it's not my problem at all.

If you are right, then it's not a problem as all; if we are right then you won't be able to work as a supplier to many, many organizations in the UK.

If some UK entity should think in the future I'm not reliable because I'm not an ltd, it's HIS problem, not mine: I don't care, I change customer. If every single UK person think the self-employed is bad, I still don't care: I can work for any other nation. There is an entire planet there. I don't care about stupid ideas. Fortunately, instead of being chosed, I have the power to chose. It's not unusual that I refuse to make a work for a customer because I don't like him. (It generally happens when the customer has no clear ideas of what he wants + he's not willing to use his brain to help me in the analysis before the project).

Good for you If you can find someone who will take you on as self-employed, then that's great - no-one here is forcing you to go umbrella or Ltd, we're just trying to make you aware that insisting that you will work in the UK as self-employed will inevitably rule you out of working with many, many organisations.

All my work is remotely and the software is installed everywhere. Some software is desktop class so is installed in Italy or other nations, but the new software I made it's only webservers based so I can install it in USA even for italian customers. Some days ago I've sold a desktop software licence in Panama.

If you are in the UK and working in the UK, then make sure you understand the taxation situation carefully if providing services to clients around the world. VAT in particular has different rules depending on where and how the "product" is delivered, so make sure you are clear on how to account for that.

Good luck with it all.

[Riccardo]

You think that clients work with a self-employed sole-trader IT specialist?

This is your problem because I work from here but I sell in Italy and as soon as I can speak english decently, I'll also start to sell in any nation where english is the main language, starting from USA.

However, just to talk, I open a parenthesis
{
I find it difficult to think that this country is so backward as depicted by cojak and confirmed by DirtyDog. I find it difficult to believe that brits still believe in that false flag and avoid self-employed as the hell on earth because:

1) I had an offer from a company in UK while not yet in UK and despite they knows I was going to start as a self-employed

2) I'm part of PHP classes and I receive weekly many requests for work from all over the world, UK included. I've already deleted the last one a couple of days ago, from a company in London. Nobody ask "Are you an ltd or self-employed?". They only ask for skill.

3) I think people can realize without big effort that it's safer a sole trader who is responsible personally and can lose his home, then an ltd company who risks nothing other than simply run out of business.


Once upon a time, in a far away galaxy called Italy, lived the same bad demon called preconception.
The srl (equivalent for ltd), at that time, sounded like something big and important.
That's not true anymore. The reasons are at least 2:

1) After zillions of failures, people finally realized that truth about the srl.

2) Some years ago, the srl could be opened only under some strict requisites. That's not true anymore: now in Italy it's the same as in UK: you can open an ltd with a ridiculous capital and even working alone. Dogs and pigs are opening ltd. So the ltd (srl), at least in Italy (but I think the same will happen here sooner or later), if not really big, displayed by a massive capital with 6 zeroes, it's only seen as a symbol of irresponsibility.
So the problem, at least, it's not ltd or not, but the capital or the number of employees. In Italy I had a customer, sole trader, self-employed, with 4 firms and around 20 employees. Do you think he could be beated by a competitor only displaying "ltd" at the end of the company name?

I don't know if here is mandatory, but in Italy, every srl (ltd) is obliged to display the capital of the company. Tons of srl are around 5000 euros!
People who read that amount, only think that the owner chose the ltd to save his bacon! So in those scenario you've better to be a sole trader than ltd... at least you don't have to display the capital.
That's why in Italy the "Ditta individuale" (Sole trader self-employed) has nothing bad. On the contrary it's even better!

If what you say is true (@cojak), I must think that here is still present the "false flag" ltd=importat=safe. Are really brits still tied to this old concept? I hope not so.
If yes I think will not endure... it's going to change as happend in Italy, unless the ltd has some different rules to save the customers.... but I don't think so because one of the main reasons to chose the ltd is, as stated everywhere, even on the HMRC website: "Ltd provides protection should the business fail as you are only liable for the amount you have invested into the company.".

I started working as an employee 35 years ago as software developer. I then bought the company I was working for with other 3 partner. In the year 2000 I left that company because my ideas on the future were incompatible with the other partners. They are now out of business while I'm still here with tons and tons of work to do, with people who push me to do his work as soon as possibile. Nothing bad happened switching from company to self-employed... on the contrary: people don't care at all.

The only important thing is the portfolio and the skill
I don't know what kojak is talking about, but it's not my problem at all. My only problem is the time. I need the Tardis of the doctor! If some UK entity should think in the future I'm not reliable because I'm not an ltd, it's HIS problem, not mine: I don't care, I change customer. If every single UK person think the self-employed is bad, I still don't care: I can work for any other nation. There is an entire planet there. I don't care about stupid ideas. Fortunately, instead of being chosed, I have the power to chose. It's not unusual that I refuse to make a work for a customer because I don't like him. (It generally happens when the customer has no clear ideas of what he wants + he's not willing to use his brain to help me in the analysis before the project).

Personally, I could even chose the software made by a baby if it works ok... the same way as I'm working with open source tools. I want to hilight that many web components are made by individual who doesn't even are in business... even the software of this entire forum, initially was made by James E. Limm and John Percival as pure individual, physical person who want to share software.

} // Close parenthesis

Ticktock
So, you will live in the UK, but work for clients in Italy? And you want to do this so that you can pay tax in the UK instead of paying tax in Italy?
Will you be working remotely, e.g. working from your home in the UK, or will you be flying out to Italy and working in the clients office to perform the work?

All my work is remotely and the software is installed everywhere. Some software is desktop class so is installed in Italy or other nations, but the new software I made it's only webservers based so I can install it in USA even for italian customers. Some days ago I've sold a desktop software licence in Panama.

[DirtyDog]

You think that clients work with a self-employed sole-trader IT specialist?

Good luck with that one...

+1 - it's not going to happen.

[Ticktock]

So, you will live in the UK, but work for clients in Italy? And you want to do this so that you can pay tax in the UK instead of paying tax in Italy?

Will you be working remotely, e.g. working from your home in the UK, or will you be flying out to Italy and working in the clients office to perform the work?

[cojak]

You think that clients work with a self-employed sole-trader IT specialist?

Good luck with that one...

[Riccardo]

I've used the wrong word company instead of firm.
I'm going to start as a sole-trader, self-employed.

Most agencies in the UK will not deal with self employed people, only people who use a limited company or umbrella.

I'm not sure what do you mean with the word "agencies"... governmental organizations? However I'm sure that for at least 1 year I'm not interested in the UK market at all since I have a lot of work to do/finish for Italian customers and for myself. This way, I'll also have time to improve my english, hoping to be decent in about a year.

In a few words I'm going to move my firm here not because I have to trade in the UK, rather because in Italy taxes have reached 70% (+ surreal, ridiculous bureaucracy) and I'm tired to work for nothing (not counting that that 70% ends up into the governmental toilet... a sort of black hole where things enter but nothing can exit).

within 3 months of starting to trade.

OK, so I remembered well. I shouldn't have problems since the NINO should be assigned in no more than one month and a half.

What is it that you'll be doing here?

I'm a software analyst/developer. Part of my work is on commision and part is for making products I then sell in the form of licence/rent.