Reply to: Going limited...

[malvolio]

Isn't this an advice forum?

I'm embarrassed for CUK that you posted this.

If you don't want to divulge the secret of your success then simply don't respond.

Yeah, genuine apologies to the forum and to the OP. Put it down to an already grumpy old git having had a difficult week. To be fair I have since answered the questions as posed, like I should have done in the first place.

[Platypus]

I spent 15 years learning those answers. Why, exactly, do you think I need to spell them all out because you can't be bothered?

Isn't this an advice forum?

I'm embarrassed for CUK that you posted this.

If you don't want to divulge the secret of your success then simply don't respond.

[Fireship]

Good question, I don't know the answer to that but I'd be interested to hear if anyone can comment on it. I think it's best to speak to them and see what they say.

Thanks for the feedback, much appreciated.

I too would be interested to hear from anyone with experience of insurance paying out to cover a tax liability. However as malvolio has pointed out PCG membership, insurance to cover legal action, and a proper B2B relationship should result in defeating any challenge brought by HMRC. Hence insurance to cover liability is probably overkill and unlikely to have been claimed against in great numbers – will still be great to hear of any positive/negative experiences though!

[Fireship]

Happy now?

Indeed, thank you for taking the time to reply.

I've already read the PCG's Guide to Freelancing but thanks for the tip anyway!

[riffpie]

I spent 15 years learning those answers. Why, exactly, do you think I need to spell them all out because you can't be bothered?

He doesn't think you need to. He's asking if you'd like to.

[Wanderer]

What is an achievable take home these days as a limited

Check out this calculator.

I’m assuming 2 x salary (myself and wife) and dividends is still the way to go or do HMRC frown upon the second salary these days?

If you are outside IR35 and your wife doesn't have any other income then yes. Otherwise, it's probably best to discuss it with an accountant and get personalised advice.

Presuming no other income for you or spouse, take £10k salary (you will pay a small amount of NI but less than the Corp tax that would be due) and then take dividends up to the higher rate tax limit for the personal tax year. If there is anything left then leave it in the company for a rainy day. If that day never comes, you can eventually close the company and take a capital distribution via MVL.

Insurance ... is it worth the paper it’s written on??

Good question, I don't know the answer to that but I'd be interested to hear if anyone can comment on it. I think it's best to speak to them and see what they say.

Best practices for staying outside of outside of IR35. I’m assuming no major changes in recent years or has case law proved otherwise??

There is so much FUD about this topic that it's unreal, there is a lot of lobbying for IR35 to be clarified but it's never happened... I suspect that lots of contractors just take out the insurance then get on with running their business and hope for the best.

[malvolio]

Been there, done that, but accountants aren’t accountable hence the request for feedback from people on the receiving end who have experience of operating as a ltdco in the current climate.

What, like me you mean? OK, so without looking anything up and now I have some time to spare...

Q1 - No idea, too many variables, but work on 75% retention of gross as a rule of thumb. Personally I take a lot les than that as income and leave the rest in the warchest and/or pension funding but hey, what do I know, that's probably totally stupid.

Q2 - Look up the Arctic case for the precedent. Between husband and wife and as long as the shares have an equal right to income there are no issues at all. It cost PCG seven years and over £0.5m to find that out, so I hope they're right.

Q3 - Every IR35 case that's been won has been supported by either PCG membership or paid-for insurances. PCG membership is unconditional. Can't speak for QDOS since I don't use them but the formalities are, I believe, pretty minimal provided your working arrangements are those of a B2B relationship. Nobody has claimed the tax losses but since well over 95% of cases are found to be outside that is hardly surprising. Naturally someone insuring you for the costs of losing a tax evasion case will want to be fairly sure what their exposure is and if they then insure you, how big do you think the risk of them paying out is? How about if they refuse to insure you?

Q4 - Nothing has changed with IR35 since Day 1. Case law has not set any significant precedents since around 2002 other than Dragonfly and JLJ confirming a couple of points. RMC is still the prime point of reference.

And since you raise the point, accountants aren't accountable since they offer advice and you're the responsible director. If they were they would be acting as an MSC and you wouldn't then have to worry about IR35 anyway. Why I'll leave as an exercise for you.

Happy now?

Now go to www.pcg.org.uk, download the 80-odd pages of the Guide to Freelancing and study it. Then you can ask intelligent questions. And you might then also understand why I thought your OP was naïve.

[Fireship]

or just find an accountant increase those expenses by £1000-£1200 a year and they will give you all the advice you need.

Been there, done that, but accountants aren’t accountable hence the request for feedback from people on the receiving end who have experience of operating as a ltdco in the current climate.

[Fireship]

Re: your expenses and long term contracts - you are aware of the 24 month rule? (Applies to brollies too).

Thanks, yes I am aware of that rule however the bulk of my expenses aren't travel related, they're mainly related to R&D and product design.

[Fireship]

SJD have a good free guide. They want an email address but won't bother you.

Thanks for the reply, much appreciated!!

Already seen that guide although I had a big issue with SJD when they first started up which meant I had to engage another firm to dig me out of the hole they got me into - hopefully they've improved since then!!

[Fireship]

I spent 15 years learning those answers. Why, exactly, do you think I need to spell them all out because you can't be bothered? And all those answers will be found in posts during the last year.

You want to be a contractor, read the guides, do your own research then ask about the bits you don't understand. Tell me everything I don't know is not exactly a valid question.

HTH

Missed the mark by the mile and nothing useful to add as always – I wouldn’t like to presume but I guess that’s due to lack of any useful experience and because (based on form) you like the sound of your own voice?

As per usual you have misinterpreted a couple of key points in your response hence I suggest you go back to school, learn to read, then the post again….. Feel free to respond once you understand your mistakes….

[mudskipper]

Re: your expenses and long term contracts - you are aware of the 24 month rule? (Applies to brollies too).

[Old Greg]

SJD have a good free guide. They want an email address but won't bother you.

[eek]

I spent 15 years learning those answers. Why, exactly, do you think I need to spell them all out because you can't be bothered? And all those answers will be found in posts during the last year.

You want to be a contractor, read the guides, do your own research then ask about the bits you don't understand. Tell me everything I don't know is not exactly a valid question.

HTH

or just find an accountant increase those expenses by £1000-£1200 a year and they will give you all the advice you need.

[malvolio]

I haven’t been Ltd since the introduction of IR35, prior to that I had been Ltd 10+ years without any issue.

The landscape has changed considerably in recent years, retro legislation, the availability of IR35 insurance and contract vetting, etc, etc, etc….. As a result I’m now considering weighing up the balance between using an umbrella or going down the Ltd route. I do however have some questions regards real world experience of trading as a Ltd in the current climate and was hoping that some readers may be good enough to share their experiences.

Firstly some background: I work in the banking sector and tend to take on long term projects ranging from 2 to 5+ years. The current role has been approx 5 years and has seen me deliver several different projects during that time. In addition my goals are set by my client but I work autonomously to deliver – i.e. defining the solution and delivery is largely down to me.

I guess my initial questions would be along the lines of:

• What is an achievable take home these days as a limited assuming turnover of approx £120,000 and £3,000 - £8,000 of legit expenses each year.
• I’m assuming 2 x salary (myself and wife) and dividends is still the way to go or do HMRC frown upon the second salary these days?
• Insurance covering legal costs and more importantly tax liability if found to be inside IR35, is it worth the paper it’s written on?? Has any reader ever successfully claimed?? Looking at the Qdos offering I’m guessing the insurance would be worthless without first having them vet the contract and circumstances which includes writing a Confirmation of Arrangements letter to the end client – which I would assume no bank is ever going to respond to thus making the insurance worthless…
• Best practices for staying outside of outside of IR35. I’m assuming no major changes in recent years or has case law proved otherwise??

I’ve read the information available on CUK but there is no substation for advice derived from experience.

Thanks all!

I spent 15 years learning those answers. Why, exactly, do you think I need to spell them all out because you can't be bothered? And all those answers will be found in posts during the last year.

You want to be a contractor, read the guides, do your own research then ask about the bits you don't understand. Tell me everything I don't know is not exactly a valid question.

HTH