Advice Please

Uncertain

isplumm wrote: »

Hi,

As an IT contractor I have my own limited company & tend to work for only 1 client at a time ....

so what is the difference between what I do (& numerous other IT contractors do) & the person mentioned by the OP?

Thanks Mark

Because you are a limited company. At the moment (although some speculate this may change) this is a virtually foolproof way around this situation.

You are an employee of your company and its accounts have to be properly prepared and certified.

SarEl

Uncertain wrote: »

Because you are a limited company. At the moment (although some speculate this may change) this is a virtually foolproof way around this situation.

You are an employee of your company and its accounts have to be properly prepared and certified.

But - the actual key is in the choice. The poster can choose their clients (a different relationship) and draw up mutually contracted terms. The poster can choose to put someone else in to the workplace to do the work for them. Even a contractor with a limited company can also be an employee - if they fail the test of self-employment. It isn't at all foolproof as a way around the test - certainly not for HMRC. I recall some time ago doing some pro-bono for a charity who fell into exactly the same trap. They employed someone to do a job who convinced them that because she had a limited company they could employ her as a "consultant". Three years later it turned out that they had taken her word for it and unfortunately HMRC didn't agree. (She also left behind a mess with two staff suspended, one unfairly dismissed and a dire need for an employment lawyer to sort out the mess). It cost them dearly to set things straight with HMRC, and they could do nothing to recover the money from her because she had gone. They shouldn't have taken her word for it - they should have checked!

Uncertain

SarEl wrote: »

It isn't at all foolproof as a way around the test - certainly not for HMRC. I recall some time ago doing some pro-bono for a charity who fell into exactly the same trap.

Interesting......

I was aware it wasn't totally foolproof (which is why I said virtually) but I had understood it to be a common and generally successful "dodge".

SarEl

Uncertain wrote: »

Interesting......

I was aware it wasn't totally foolproof (which is why I said virtually) but I had understood it to be a common and generally successful "dodge".

I think that it is only generally successful by virtue of the fact that what is happening doesn't come to the attention of HMRC all that often. There is a huge difference between them not noticing and them agreeing! In this case they noticed because said employee sacked the administrator and then proceeded to forgot to pay the tax people. They tend to get nosy about things like that. You have to be very very careful. "Control" is a big test - and they look at things like who controls who does the work (you, or could you put someone else in); who decides where you work and when you work. I don't recall the entire thing now. That wasn't what I was there for so I was only incidentally involved. But it has to be a genuine contracting relationship. So, for example, an IT contractor might not be able to choose their workplace (the employer generally wants them near the computers!) but that is a practicality of the work rather than an instruction (you will work at this location at that desk), but they would be able to pass other tests (the computers still have to work when you are on holiday so you can send someone else to do the work for you) etc.