Reply to: Just accepted a role outside IR35 - nervouse but excited

[hobnob]

£5k for contractor insurance???

Yup, I agree with Lance. I paid £231 to Kingsbridge last month for my company's annual insurance, which includes:
* Public Liability (£1,000,000)
* Professional Indemnity (£1,000,000)
* Employers Liability (£10,000,000)

What does your (meetpomo's) insurance include for that 5k?

[northernladuk]

Hey guys, I think i've hit the holy grail - but I need some basic advice.

My first piece of basic advice is use a bleeding spell checker for absolutely everything when you are working for the client.

1. Role is outside IR35

Is it really? You have an SDS from the client in your mit? If you haven't you might get a nasty surprise come first pay run. The fact it's 18 months starts alarm bells ringing.

2. I will be paid weekly - timesheet based via a company[

A company? What does that mean? You misname a load of entities throughout your post so you need to take more care and understand who is who.

- they take a comission weekly from the employer

From who? They are NOT your employer. If they are then you are NOT outside. Again, learn who they are, what you do and use the right terminology.

- so when I work - they get paid as well and I dont pay them anything extra for the role

You never do, that's not how contracting works.

3. The role is available for 18 months

It's not really. There are notice periods and even they don't mean anything. They can stop paying you on the spot if they want to. It's in the contract (which you've read and fully understand of course?). Don't assume it will last the full 18 months. It can end in a day if it has to.

4. I have a set of roles and responsibilities I am comfortabel taking on

Another flag to your IR35 status. An employee has roles and responsibilities. You as a contractor should have a clearly defined work schedule of what you will deliver. That's what keeps you outside. R&R like a permie doing the same job as permies puts you inside. You don't get a builder in to build a garage based on a set of roles and responsibilities do you. You get him to build you a garage to detail specs.

1. Company will pay direclty into my business bank account

Which company. There are three in the chain. The client, the agent and your LTD.

3. I currently also sell equipment through my companies house

Through your companies house? What on earth is that supposed to mean?

4. All my accouning is done through Quickbooks Online and submit quarterly VAT returns on goods I buy and sell for a profit

Get an accountant pronto. You are potentially dealing with 100's of K of income and 10's of K of tax and vat. Get a professional.

1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?

You need business insurance if you are travelling on business. If the client is in the same geographical area as you already work in/commute to you could fall foul of the 24 month rule. This kicks in when you can reasonable assume you will be there for more than 24 months so with an 18 month contract you could already be busted and not be able to claim a single penny.
E.g. If you've been working in Manchester city for 6 months and then get this gig for 18 then you've been in the same geographical location for 18 months so it becomes your permanent place of work and no expenses allowed at all. This covers a fairly wide area as well. A move from East Manc to West Manc isn't going to be a significant change so you are still caught.

2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.

Get an accountant.

3. I intend to do all future purchases required for my business use through my companies house

Through your what??

3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?

Get an accountant

4. Is there anything I can do to cut down on my taxes but still being compliant

Get an accountant

5. I currently have a mortgage as my main property, but will be hiring out a workshop/office space under companies house - Is there anything I need to be aware off?

Yes, this is a bad idea. If you had an accountant they would explain it. Just claim £6 per week from your LTD as per EIM01476. Very very few of us rent space as it's difficult to justify and overly complex.

Keen to see what people think and to let me know what I need to be aware off when I start this role end of this month.

Cross absolutely everything you have because it's not uncommon for gigs to evaporate when waiting a long time for them to start.

Oh, and get an accountant.

[GJABS]

By the way, new contract, new

[BigLadFromBeeston666]

Hey guys, I think i've hit the holy grail - but I need some basic advice.

After about 10 years in employment and 6 months of running on my own, I finally have a contract for at least 18 months - a role outside IR35 and offering a decent day rate.

The New Role:
1. Role is outside IR35
2. I will be paid weekly - timesheet based via a company - they take a comission weekly from the employer - so when I work - they get paid as well and I dont pay them anything extra for the role
3. The role is available for 18 months

My responsibilities:
1. I will have to take out contractors insurance circa about 5k per annum
2. Responsible for all PPE for the role
3. Responsible for all IT equipment - I have this already
4. I have a set of roles and responsibilities I am comfortabel taking on

Financial Arrangements
1. Company will pay direclty into my business bank account
2. I am companies house and VAT registered for the business
3. I currently also sell equipment through my companies house - which doesnt take a lot of my time and is managed
4. All my accouning is done through Quickbooks Online and submit quarterly VAT returns on goods I buy and sell for a profit

Questions:
1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?
2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.
3. I intend to do all future purchases required for my business use through my companies house - this include sustenance, entertaining, fuel, IT equipment, tools and even some subcontractors to manage some of my projects while I am working for this role
3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?
4. Is there anything I can do to cut down on my taxes but still being compliant
5. I currently have a mortgage as my main property, but will be hiring out a workshop/office space under companies house - Is there anything I need to be aware off?

Keen to see what people think and to let me know what I need to be aware off when I start this role end of this month.

By "agreed roles and responsibilities you're happy with" do you mean, agreed a statement of work specifying the services your company will provide?

Do you have Status Determination Statement with regards to IR35?

[Lance]

£5k for contractor insurance???
You must be bleeding some very delicate radiators for that.

get an accountant. And double check that insurance as it sounds very high.

[quackhandle]

That is the holy grail indeed.

Good luck, we are all counting you.

qh

[TheDude]

I finally have a contract for at least 18 months - a role outside IR35 and offering a decent day rate.

You have a contract for a potential 18 months but can be let go at any time.

In reality you have a contract for as long as your your timesheets continue to be approved and that may well be shorter than your notice period.

[WTFH]

Quick questions:
Are you running two businesses or more? (e.g. a parent company, a contracting business and an R&D one) I am only asking because of the vague way you have answered some questions
Who is your accountant?
Who is giving you advice on how to run the business?

[vetran]

Turnover over £85k you have no choice but to register. If you don't expect to to turn over more for what you are doing I would be surprised.

https://www.gov.uk/vat-registration/...%20voluntarily.

Once registered most issued invoices have to contain vat sounds like yours should. IANAA

https://www.gov.uk/vat-record-keeping/vat-invoices

The Vat men have been doing it for a long time they like using their powers if they are suspicious don't upset them.

[Whorty]

You need an accountant, not random strangers on an internet forum. You need to get this right and at the moment you sound very confused.

For example, your invoices must include VAT if you are VAT registered.

[meetpomo]

Not really, other than getting business insurance for it (not expensive but necessary). You can claim 45p a mile to cover all costs from YourCo (although most cars cost around 65ppm these days...).


If you raise an invoice - even a virtual one to keep your records straight - you must add VAT. The logic is you are providing a service to the management company and that is what VAT is charged against. So I'm not totally convinced your approach is correct or even legal. Speak to an accountant.


Not a problem. I use a company credit card for all business expenses, so they never go near my personal bank account.


If you receive income - salary or dividends - HMRC will treat it as salary and will expect all normal taxes to apply. You don't have to take a salary or pay yourself, of course, but if you do then taxes are due. Don't try and get around that, it would be a very bad idea.


Yes. don't earn anything...


You seem to be missing the absolutely critical bit of awareness here. You and YourCo are two entirely separate legal persons. If you look at YourCo in the same was as you do Tescos, the boundary between whose money pays for what will be a lot clearer. And read up on Benefit in Kind rules...


No doubt some of the better qualified guys around here will add their contribution. Meanwhile, why have you got two question 3s...?

if i use funds obtained from this contract role for other projects that are under the same company or same limited company; can I do this - this can be R&D or customer projects?

Is my incomings from this particular contract (outside IR35) and incomings from other services (product i normally sell online) meant to be treated separately? Or does it all come into one pot.

[meetpomo]

Regarding mileage, make sure that your car insurance covers business travel.

If your company is VAT registered then you have to add VAT to your invoices, i.e. you have to charge VAT to the management company. (Assuming that they're also VAT registered, this shouldn't be a problem for them.)



Just as a minor point, you listed "3" twice

You need to be clear about the distinction between the company's money and your money. Similarly, the company will pay corporation tax while you will pay income tax and dividend tax. Can you be more specific about your question?

Sorry should have been clear and apologies for the typo!

Basically I do a lot of R&D for new products and introduce them into the market, I just want to make sure that I can reserve capital for purchases I need to make when I develop these products rather than paying tax. I am totally distinguishing my monies from company monies here - i need to take a salary obviously for my expenses but also want to make sure that I have money set aside within my company bank account for future purchases for R&D projects.

[meetpomo]

Yes. BE ABSOLUTELY SURE THAT IT IS OUTSIDE, AND REMAINS OUTSIDE IR35.

Yes, my terms of engagement states outside IR35 and nothing else. The project will go on for at least 18 months

[Eirikur]

Why don't you register for VAT, you say you will drive a lot and you can also claim back VAT from mileage (besides all other cost such as meals, computer, hotels, phone etc)

[malvolio]

...snip...

Questions:
1. I will be doing a fair amount of mileage - the mileage will be captured and accounted for using quick books at standard mileage rate - this is my personal car I use for business use - is there anything I need to be aware of legally?

Not really, other than getting business insurance for it (not expensive but necessary). You can claim 45p a mile to cover all costs from YourCo (although most cars cost around 65ppm these days...).

2. I intend to raise invoices (without VAT) on my quickbooks and reconcile my transactions without VAT - therefore it does not reportable for VAT return - it this ok? I will not be issuing invoices to my company as the management company will already do this and are responsible for it. They are not expecting a VAT invoice from my either.

If you raise an invoice - even a virtual one to keep your records straight - you must add VAT. The logic is you are providing a service to the management company and that is what VAT is charged against. So I'm not totally convinced your approach is correct or even legal. Speak to an accountant.

3. I intend to do all future purchases required for my business use through my companies house - this include sustenance, entertaining, fuel, IT equipment, tools and even some subcontractors to manage some of my projects while I am working for this role

Not a problem. I use a company credit card for all business expenses, so they never go near my personal bank account.

3. I intend to then do a monthly payroll for the minimum I need for my expenses as I want the business to keep growing finanically - I am aiming to cut down on my tax payable. As the company is registered as a Ltd and not a sole trader, would I be liable for the higher tax band when I take out funds?

If you receive income - salary or dividends - HMRC will treat it as salary and will expect all normal taxes to apply. You don't have to take a salary or pay yourself, of course, but if you do then taxes are due. Don't try and get around that, it would be a very bad idea.

4. Is there anything I can do to cut down on my taxes but still being compliant

Yes. don't earn anything...

5. I currently have a mortgage as my main property, but will be hiring out a workshop/office space under companies house - Is there anything I need to be aware off?

You seem to be missing the absolutely critical bit of awareness here. You and YourCo are two entirely separate legal persons. If you look at YourCo in the same was as you do Tescos, the boundary between whose money pays for what will be a lot clearer. And read up on Benefit in Kind rules...


No doubt some of the better qualified guys around here will add their contribution. Meanwhile, why have you got two question 3s...?