registering self employed and doing additional work for existing employer

ItsOnlyMe_2

Hi,
I would like to earn a little bit more money on the side by starting a small business in addition to my existing job.

One thing I am wondering about is if I can do additional work for my existing employer and invoice for it. Looking at it it may be my main source of income in terms of self employment, but I would be doing other things which would bring in money.

Any advice appreciated, I was looking to do this through sole trader status. Would it be helpful if I registered as a partnership with my wife, who would also be helping in this additional work?

zzzLazyDaisy

You need to take advice from an accountant, but as far as the inland revenue are concerned the work that you do for your current employer will almost certainly viewed as income from employment and not self-employment.

ItsOnlyMe_2

thanks zzzLazyDaisy.

The sole trader I know is not suitable, I was just interested in the partnership route. My wife operating as a sole trader and doing the work would not cause a problem would it?

zzzLazyDaisy

The thing is, the tax situation is complicated. In essence, if a person does work for a company regularly, especially if it is on the company's premises, or at the compsny's direction, then the inland revenue is likely to class it as a part-time job - ie employment rather than self-employment. This is even more likely to be the case if the work for that company forms all, or most, of sole trader's work.

This is to stop people classing themselves as self-employed instead of employed. Not saying that's what you would be doing, but that's the reasoning behind it. These rules came in around 1999 (I'm speaking from memory, so that may not be exact)

A lot of small businesses have had to close down since the change in the rules, because most (and in some cases all) of their work was for one company.

That is why you need advice from an accountant.

vivatifosi

I am worried that you may fall foul of IR35 legislation. In essence this asks the question, 'if the contractor or company didn't exist, would this person be employed by the company?' If the answer is yes, which in your case it really sounds like you would, then you could be hit by IR35 legislation. I agree with the others, you should get advice from an accountant or at the very least Business Link or similar, to see whether your idea is a viable one.

When I left my former employer with a contract to do work for them still, I had to jump through all kinds of hoops to make sure that I was IR35 compliant, including (though not limited to) making sure that I worked on my IT equipment not theirs, not working on their premises and making sure that I was building up a base of other clients. I really don't think that the situation you've described is separate enough. That isn't to say that you can't make a go of a separate business, just to be careful how its structured.. Good luck!