Self-employment or Ltd company?

Mistral001

No you do not "need" to set up a ltd company. Many small, if not most small businesses operate as sole trader businesses. Some quite large business having hundreds of employees and millions in turnover each year also operate as sole trader businesses.

00ec25

Robots wrote: »

Obviously I 'genuinely' want to deal with 'things' or I wouldn't be here asking; the original question posed was at what stage (or income) would it be beneficial for me to consider setting up a limited company rather than remaining self-employed.

if a prospective client asks us the Q: sole trader v LTD? our rule of thumb is to advise that turnover of less than £35k makes it more tax efficient to be sole trader, not Ltd. Above 35k turnover we can explore options and expect ltd to win if figures are firmed up, above £50k ltd is a no brainer for tax purposes

Robots wrote: »

It wasn't apparent to me at the time of writing that I may not be 'toeing the line' in the eyes of HMRC - which I obviously want to do. Now that it is apparent, the question has changed to do I NEED to set up a limited company?

indeed, and that is a question you will need more fact gathering before you can be sure of an answer.

you have been given the HMRC link for the self employment questionnaire. Those questions are what HMRC would use in a tribunal if they decide you are not self employed.

Robots wrote: »

Thanks for offering up something I could look up (IR35). From what I understand, IR35 applies to limited companies (which I am not), or did you mean this may apply if my client is a limited company? In which case, this may apply (I took the quiz). I now have some points I can look at to make sure I am not falling foul of this.

IR35 applies if you are the Ltd company and it is your company which acts as the PSC (personal service company) to its client. In other words it is all about a one person band calling themselves a company but doing a job that would in all other respects be performed/delivered by a full blow employee of the company paying "you". I.E. it is done by both sides as a tax fiddle since it has tax advantages to both you as the income recipient and the client as the person footing the bill.

making sure your company is IR35 "compliant" (ie cannot be shot down) is relatively "easy" if you get advice from those in the know. However, at the same time the real risks of HMRC ever chasing your company for IR35 is slim to non existent going on the last 5 - 10 years of HMRC investigations.

Robots wrote: »

To clarify, in no way do I consider myself an employee for any of my clients (believe me, if I were I'd be raking in that annual leave and getting paid to attend my hospital appts), but I do understand that HMRC may view parts of my activity as something an employee would do.

does not matter what you "think", does not matter what the company paying you "thinks", since both sides have vested interests in either being an employee or a self employed business depending on the respective desired outcome

What matters hugely is how HMRC apply the rules to the relationship between you as worker and them as payer of money to you.

As you say you have done the test then you now should know how you can answer HMRC....

so to return to the start point, go limited if it is tax efficient for you to do so. Be water tight on your contractual arrangements with your client so there can be no question about "disguised employment". Make money

Zygyra

hmmm) thnak you for information)