Am I doing something wrong?

sarahdavison

Hi everyone.

Something is really bugging me. I started working for myself last March. I always knew that I would recieve alot of my work from one source (an ex-collegue who also works for herself). As it happens all of my work for the past 10 months has come from her and I have not needed to look elsewhere for additional work. I know that the IR have some rule about self-employment and working exclusively for one company. I am concerned that I am breaking the rules and will be in trouble with the IR if they ever decide to audit my accounts. I am paying class II and class IV contributions as I should be. I consulted a solicitor some time back who told me that is is my ex-collegues problem not mine as she is the one who is not taking me on as an employee and is avoiding paying NI contributions for me even though I essentially work for her.

Should I be worried? Does anyone know? If it is a big problem then I will need to make some effort to source some work from elsewhere.

Thanks so much for your help!
Sarah

Chippy_Minton

Sarah, IR35 may be the rule you're referring to and I'm not sure if it applies to your situation but you may want to look at the HMRC IR35 pages.

StratApproach

Hi Sarah I've been self-employed for last 18 months.

Have tried to get other work, but to be honest not looked too hard as I am studying at the moment.

I have only been working for the one one company. Invoicing generally monthly and paid by cheque. Paying my own Nat ins and now the big tax bill (this month!).

The rate I agreed verbally with the organisation.

I do not have any contract with them - therefore no notice period, sick pay holiday pay etc and some of their nice benefits. My work varies with no paterrns (between 2-4 days a week) to it (one minute a Project Manager, next a Strategy Manager, presentation designer and then a typist - pays the money so me does anything)- to be honest I've been extremely lucky.

Sometimes project related and other times one-off. Always expecting them to say there is no more work to come, but off tomorrow but going in on Monday - so that's another day's money.

My accountant said this was ok - just don't go limited he said as IR35 would be a problem.

Like you it was and I suppose still concerns me even after seeking advice.

At the end of the day, I what to take on more clients but I've enough to cope with at the moment. Soon I hope too.

Best wishes,

StratApproach.

pchelpman

sarahdavison wrote:

a solicitor some time back who told me that is is my ex-collegues problem not mine as she is the one who is not taking me on as an employee and is avoiding paying NI contributions for me even though I essentially work for her.

The solictor is spot on.

This is likely only to crop up if your ex-colleague's books are inspected and the Revenue ssee you are being paid by your ex-colleague on a regular a baisis. That's what would provoke questions.

If the worst happened then, so far as you are concerned, you would be reclassified as PAYE "from such & such a date in the future". They would not attempt to recover previous tax years' lost money from you.

sarahdavison wrote:

Should I be worried? Does anyone know? If it is a big problem then I will need to make some effort to source some work from elsewhere.

No need to worry at this stage, I feel, although perhaps someone might mention it to your ex-colleague. I'm thinking that, if they do, they may well instigate changes of their own before the Revenue comes a' callin'.

As a general rule the Revenue would be happier if you did have a selection of different sources for your income BUT they have always said they will look at each one on its own. So .... even if you do have several sources of freelance income the regularity of this job could still cause arguments if it came to light.