Contracting/consulting a few hours on the side - what to watch for??

[jayflat]

Thank you all - most valuable advice!

I will try and have the clause watered down...

[d000hg]

Liability insurance is quite pricey isn't it, for a few hours work a week? Can't you get this out of the contract? Being sued because you have a bug in your code is just something you shouldn't be open to, insurance should be to cover you if you knock over a client's server or pour coffee into it in my view.

If you are not VAT registered, you simply don't charge them any VAT. The only difference it will make is if you have expenses... you won't be able to claim back the VAT. But for working on side projects I'd just avoid the hassle. If you were hiring sub-contractors it could be an issue but that also sounds unlikely.

Checking your permie contract is absolutely required. Not just if you are potentially using 'skills gained for your employer', but say if you come into work knackered every day from working until midnight on some coding for your contract client? They can justifiably be mad, your other work is affecting your performance and costing them money... once this happens it can go from "it's just in the contract as a standard clause" to "get out".

[MikeC1408]

t

Just make sure name is not all over the code and they put their names on it as well.

Then it would be very difficult to prove who was at fault for any problems.

And keep copies of all UAT sign off etc

[SueEllen]

t

But yes I'm actually freaking about the liability.
I will definitely take insurance, but that is only good as the policy lasts.
I'm less worried about defects (since I will be sharing code with the employees), but more for claims 10 years down the track (e.g. accidental patent/copyright infringement); don't wanna go bankrupt!!

Just make sure name is not all over the code and they put their names on it as well.

Then it would be very difficult to prove who was at fault for any problems.

[jayflat]

Thanks for your replies.

Yes it seems I won't earn enough to be VAT registered. I haven't checked exactly what this means - if I'm not registered I don't collect it?

@XperTest - My other employer is aware of the contract.
But yes I'm actually freaking about the liability.
I will definitely take insurance, but that is only good as the policy lasts.
I'm less worried about defects (since I will be sharing code with the employees), but more for claims 10 years down the track (e.g. accidental patent/copyright infringement); don't wanna go bankrupt!!

[centurian]

But I don't think you can be VAT registered as a sole trader. This is probably not a big issue, you just don't charge VAT.

You can be registered as a sole trader - in fact you have to register when you hit the threshold, unlikely in the case of "on the side" work though.

[XperTest]

I can think of two things you may want to check:

1) what does your permie contract say about working part time as a contractor. Especially if you will be using knowledge obtained from the permie job, this may be frowned upon I'd imagine.. Is your employer aware of this plan B?

2) at that rate, no way would I accept to be liable for defects, negligence, omissions, etc. If you plan to accept a contract that specifically specifies this, you may want to check on insurance to protect you against this, as you could quite easily be losing money rather than making some extra money. I don't think it is normal to be liable for any defects, but maybe somebody else can confirm this?

[d000hg]

It's called working as a Sole Trader, about the only way to 'properly' be self-employed. It's absolutely fine, one reason people don't generally do it is that agencies won't allow it normally. If the company you work with is fine, then go for it.

But I don't think you can be VAT registered as a sole trader. This is probably not a big issue, you just don't charge VAT.

You will strictly need to do a self-assessment tax since you have your job and this extra work, rather than PAYE through your employment. But maybe you're planning to keep it as undeclared pocket money... for a few hours work a week you'll have to gauge the risk of doing so.

[jayflat]

Hi there,

I am employed full-time, but planning to (IT) consult a couple of hours to a day a week (at around £25/hr).

I'm about to sign the contract with the client, which looks very much like I'll be a contractor: I'm to use my own equipment, work at own premises, liable for defects, and liable for negligence/omissions.

Given this is not a lot of money, I was planning to operate on my own; rather than venture in to the world of an Umbrella Firm, or setting up a limited company. I guess that I can just register myself to collect the VAT and issue the invoices myself.

Thought it might be smart just to run this past you guys, in case I'm doing anything obviously stupid or underestimating the nightmare ahead?


Thanks!!

PS I'm planning to take PI insurance, but I'll post about that in a separate thread