Going self employed?

Jason_Denver

I have been offered some temporary project management work for a local authority but they want me to work self employed via my own limited company rather than an agency.

1) How do I go about claiming expenses working this way?
2) can I work through an umbrella company?
3) Is this a bad idea? Whats the benefit for me?

Jason

Hammyman

Jason_Denver wrote: »

I have been offered some temporary project management work for a local authority but they want me to work self employed via my own limited company rather than an agency.

1) How do I go about claiming expenses working this way?
2) can I work through an umbrella company?
3) Is this a bad idea? Whats the benefit for me?

Jason

Firstly, it is very unlikely to meet the HMRC rules regarding self employment and the council know it which is why they want you to be Ltd Company.

1) You include it in the bill you send them.
2) Be wary. Yes you could but HMRC is on a witch hunt.
3) You lose all rights as an employee. SSP would have to be claimed from your Ltd company. Holiday pay would have to be paid by your limited company. You would have no right to minimum notice period from the LA but your Ltd Co would have to pay it to you.

Benefit for you? Very little but a lot of risk as there is no law that states when they have to pay you so you could easily find yourself on 60 or 90 day payment terms (do a month, send in an invoice then get it paid 2 months later which means 90 days between doing the work for week 1 and being paid for it) Benefit for them? They get to completely absolve themselves of any obligations under employment law, don't have to pay employers NI or holiday pay and can sue your company for any problems that arise.

Premier_2

Already responded to the OP in the other thead he started on the same subject.

https://forums.moneysavingexpert.com/discussion/2549767

Regarding payment terms, that should be specified in the underlying contract which hopefully is the supply contract the OP wrote, but probably with a council is the purchase contract they issue.

Hammyman

The reality is you can state whatever payment terms you want but you'll get paid when they decide they're ready to.

Premier_2

Hammyman wrote: »

The reality is you can state whatever payment terms you want but you'll get paid when they decide they're ready to.

Well it's a bit like anything ... including an employer paying an employee wages ... they can decide to breach the terms of the contract if the wish and that will make things difficult.

However a breach of contract is a breach of contract, and the failure to pay on time should result in careful consideration to the supply of further services.

Fortunately, small businesses can claim interest at 8% above the BoE rate (currently 0.5%) plus reasonable debt recovery costs on late payments
http://www.payontime.co.uk/legislation/legislation_main.html

Hammyman

Premier wrote: »

However a breach of contract is a breach of contract, and the failure to pay on time should result in careful consideration to the supply of further services.

Fortunately, small businesses can claim interest at 8% above the BoE rate (currently 0.5%) plus reasonable debt recovery costs on late payments
http://www.payontime.co.uk/legislation/legislation_main.html

Good luck with that. You can claim, but don't expect to get any more work from them and in a close knit area like mine, expect to have possible difficulties getting new work. Also remember that even though you can add 8% onto the outstanding invoice, it still doesn't guarantee you'll get your money quicker.

Uncertain

Hammyman wrote: »

Firstly, it is very unlikely to meet the HMRC rules regarding self employment and the council know it which is why they want you to be Ltd Company.

1) You include it in the bill you send them.
2) Be wary. Yes you could but HMRC is on a witch hunt.
3) You lose all rights as an employee. SSP would have to be claimed from your Ltd company. Holiday pay would have to be paid by your limited company. You would have no right to minimum notice period from the LA but your Ltd Co would have to pay it to you.

Benefit for you? Very little but a lot of risk as there is no law that states when they have to pay you so you could easily find yourself on 60 or 90 day payment terms (do a month, send in an invoice then get it paid 2 months later which means 90 days between doing the work for week 1 and being paid for it) Benefit for them? They get to completely absolve themselves of any obligations under employment law, don't have to pay employers NI or holiday pay and can sue your company for any problems that arise.

I think this is rather sweeping and negative!

At the moment the Ltd company route is a way round the ever tighter definition of "sham" self employment. Who knows for how long?

It really depends how strong a bargaining position the OP is in. Providing the council will agree it is perfectly possible to draw up a contract that would give him far more security than as an employee.

Also, remember you have very little security as an employee in the first year and nothing like as much as many people fondly believe thereafter!

Obviously the fees paid would need to reflect the fact the normal employee beneifts (holiday / sick pay etc) are not paid but these are to some extent offset by a better tax position.

The OP would be wise to use an accountant so this (tax deductible) cost needs to be factored in as well.

Hammyman

Uncertain wrote: »

I think this is rather sweeping and negative!

.

Its reality. I've been self employed for several years, including working for blue chips. Most of my friends are S/E as well.