Ltd company and locum work

ruthie4931

Hi,

I am a healthcare professional. I have a full time employed job and I also work in private practice as self employed alongside this (I'm a busy person!).

I'm considering giving up my permanent employed job to take on locum work on a permanent basis ie 3months for contract then maybe a month somewhere else etc, still keeping the private practice work which is commissioned on an as hoc basis by different companies and registering as ltd company to be tax efficient etc.

If I do this I wondered if anyone had any tax tips or experience especially relevant to locum work or any words of caution?

Best wishes

chrismac1

This is quite common in my local area. I've had a couple of GPs on my books doing this, both of whom moved out of the area. One was doing purely locum work across the whole of Cumbria and Northumberland, which is a wide geographical area. The other was doing locums within 15 miles of her home, plus telephone "out of ours" GP helpline work.

Points I'd make from this:

1. Get the contracts reviewed for "IR35 compliance" for peace of mind.

2. Get tax investigation insurance for £90 per year. A tax enquiry into this sort of arrangement is potentially lengthy and costly.

3. Only give each client the company details and company bank account. One of the first guy's biggest customers kept paying his invoices into his personal account. Apart from the headache to sort out the books, this would not have helped us had HMRC came calling.

4. One of the main challenges in this area from HMRC has been travelling costs. Ideally, ensure that some element of most of your work is being done from your home - for example writing up medical reports. You want to show that your home is your "centre of operations" and hence that each medical centre is not a "temporary workplace". Hence home to work travel costs are claimable at 45 pence per mile for the first 10,000 miles per tax year and then 25 pence thereafter.

ruthie4931

Thanks for your reply chrismac1. The private practice I already do, and would continue to do, mainly involves writing client reports at home (which take many hours) following a couple of assessment appointments elsewhere. So it sound like I would easily be able to show this. I have also had to register with the information commissioner because I do this at home.

Is it an accountant who would look at contract IR35 compliance or a solicitor?

Also, I have asked my existing accountant about how easy it is to change to ltd company and for him to deal with this. He currently deals with my basic self-emp accounts. I don't know his background/experience as he was a recommendation through a friend and we have only communicated over email and he is away until February. A question you may be able to answer would be whether an accountant who has experience with locum/ltd companies is needed or are most accountants trained and equipped to deal with this (I ask as someone naive about how much difference there would be for the accountant).

Best wishes and thanks for reading.

Pennywise

ruthie4931 wrote: »

Is it an accountant who would look at contract IR35 compliance or a solicitor?

Contract reviews are best done by an IR35 specialist as it's a half way house between an accountant's and a solicitor's job, being based on tax statute and case law. The "average" accountant or solicitor probably wouldn't know enough about it to give a worthwhile opinion. In our practice, we suggest clients use QDOS consulting, but there are other firms such as Bayer & Cottrell and Accountax who do contract reviews relatively cheaply.

ruthie4931 wrote: »

A question you may be able to answer would be whether an accountant who has experience with locum/ltd companies is needed or are most accountants trained and equipped to deal with this (I ask as someone naive about how much difference there would be for the accountant).

No, a surprisingly large number of accountants, large and small, don't do a very good job when it comes to personal service companies which are quite a specialised area, not just in respect of IR35, but also dealing with director's expenses claims, director's payroll, VAT registration options, etc. I'd say you'd be better going to a freelancer-specialist accountant and using some freelancer specialist book-keeping software such as Freeagent.

chrismac1

I also use Qdos for the IR35 reviews. Another very good option a few clients are using is through the PCG - Professional Contractors Group - which is a good site for people new to limited company contracting.

The issues someone who is going to keep you right should have on the top of his or her head in this field are:

1. Share structure especially if there is the potential for spouse or adult child involvement, which for some reason doctors always seem well keen on!

2. Expense claims.

3. PAYE registration including whether this is necessary in view of your other income.

4. VAT registration including a documented and filed record of why your services are viewed as exempt under Schedule 9 (medical) if that is the conclusion reached. This is very topical as HMRC are having a go at this!

5. Helping you set up a robust system for raising sales invoices and recording expenses and bank transactions.

6. Proper dividend calculations and vouchers - see another current thread on this site on this very topic! Wishy washy dividend paperwork is an especial risk to a doctor with income outside the limited company, especially if more than 1 share class is going to be set up.

If you can find someone who doesn't look either blank or irritated when you ask about these things - or even better volunteers this stuff - then you are on the right track.

ruthie4931

Thanks for your further replies.

I don't know how to do the 'quote' thing so I have copied and pasted chrismac1:

1. Share structure especially if there is the potential for spouse or adult child involvement, which for some reason doctors always seem well keen on!but I would be keen for my partner to be employed by the company as he does my admin and appointments etc.

I would be keen for my partner to be paid and employed as he does my admin etc - I suppose an accountant would need to help me with this.

4. VAT registration including a documented and filed record of why your services are viewed as exempt under Schedule 9 (medical) if that is the conclusion reached. This is very topical as HMRC are having a go at this!

Although I have the title of Dr, I am a psychologist rather than a medic and working in hospitals on rehabilitation and recovery as well as the other assessment work - I imagine this would come under medical as VAT exempt but I don't know too much about this - the treatment my clients receive is necessary treatment. I don't know about VAT registration though and if I need to register as exempt etc - again I would need an accountant's help.


6. Proper dividend calculations and vouchers - see another current thread on this site on this very topic! Wishy washy dividend paperwork is an especial risk to a doctor with income outside the limited company, especially if more than 1 share class is going to be set up.

I don't even understand this! It seems I am in need of a lot of help. If anyone can recommend services either on here or direct message I am keen to hear from you.

Best wishes and thanks for taking the time to read my posts.

Laurajo_2

Setting up a company certainly seems like the most logical thing to do.

One thing to consider (and it may not apply) that if you are undertaking nhs work (I know you mentioned private, but just thought I'd make the point) there will be complications on the superannuation side - I believe that by paying you into a company, most pcts will not allow you to superann this income. There may be ways round it but it certainly needs clarifying.

It is becoming a more common structure for medical professionals to take - I've seen it most commonly used for gps etc in partnership who have this as there main income, then the limited company for private fees and non superannuated locum work.

ruthie4931

thanks - I had to look that up - some of the work I will be doing is for private hospitals so I suppose i need to think what's financially best in tens of pension if i do NHS work. Do you know if there is a continuous duration of time that a professional needs to work NHS locum in order to claim superannuation?

Thanks

Ruth

daffydukky

ruthie4931 wrote: »

Thanks for your further replies.

I don't know how to do the 'quote' thing so I have copied and pasted chrismac1:

1. Share structure especially if there is the potential for spouse or adult child involvement, which for some reason doctors always seem well keen on!but I would be keen for my partner to be employed by the company as he does my admin and appointments etc.

I would be keen for my partner to be paid and employed as he does my admin etc - I suppose an accountant would need to help me with this.


Yes correct an accountant would be able to best calculate what should be paid and how to maximise use of personal allowances and so minimise tax

4. VAT registration including a documented and filed record of why your services are viewed as exempt under Schedule 9 (medical) if that is the conclusion reached. This is very topical as HMRC are having a go at this!

Although I have the title of Dr, I am a psychologist rather than a medic and working in hospitals on rehabilitation and recovery as well as the other assessment work - I imagine this would come under medical as VAT exempt but I don't know too much about this - the treatment my clients receive is necessary treatment. I don't know about VAT registration though and if I need to register as exempt etc - again I would need an accountant's help.

VAT registration is dependant upon turnover not profession and it will depend on how much you generate as a business as to whether you need to be VAT registered or not, limits are revised annually on HMR&C website c£79k pa but rules are complex so need to be checked an Accountant can advise

6. Proper dividend calculations and vouchers - see another current thread on this site on this very topic! Wishy washy dividend paperwork is an especial risk to a doctor with income outside the limited company, especially if more than 1 share class is going to be set up.

I don't even understand this! It seems I am in need of a lot of help. If anyone can recommend services either on here or direct message I am keen to hear from you.

Best wishes and thanks for taking the time to read my posts.

Companies pay out either by way of a Dividend (limits apply as you cannot pay more than available profits) or wages - wage rules require PAYE and NIC payments but should raise no further liability a dividend will have tax paid separately by the individual as part of self assessment after the SA is submitted annually - This is complex tax related and is best explained by an accountant to make sure you do not fall foul of tax rules


I hope this helps