Self Employed vs PAYE

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in Cutting tax
I retired from IT a while ago and have recently started some part time work for a new, small limited company created by my former boss. We are in discussions with an accountant and lawyer regarding a proper employment contract and payment via PAYE but it's taking some time. In the mean time they suggest I register as a sole trader with HMRC and work as a contractor so that I can receive payment. I'll be owed about Β£5K by the time PAYE is sorted out.
Does that sound like the best way forward? I haven't been self employed before, always PAYE, although I did used to do self-assessment so if that's all that's involved then I'm fine with it. I'm willing to wait a bit longer to receive payment though, so would it be feasible to just wait and then receive back pay via PAYE? Or would HMRC get snarky about that because they didn't receive tax and NI at the time the work was done? Is it fine for the tax and NI to be paid at the time I get paid, even though it is for work done in previous months?Β
Does that sound like the best way forward? I haven't been self employed before, always PAYE, although I did used to do self-assessment so if that's all that's involved then I'm fine with it. I'm willing to wait a bit longer to receive payment though, so would it be feasible to just wait and then receive back pay via PAYE? Or would HMRC get snarky about that because they didn't receive tax and NI at the time the work was done? Is it fine for the tax and NI to be paid at the time I get paid, even though it is for work done in previous months?Β
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In other words, this is a classic PAYE scenario.
I can spell, my iPad can't.
Just wondering if there are any pitfalls with HMRC caused by me working for several months without pay and then receiving a lump sum to cover back pay. All the work done is in the current tax year if that helps.
If that really is a small company, then I think the onus of status determination falls to the OP.
In that case, the OP may be worth considering own Ltd Co and never planning to go PAYE.
I will be a permanent employee via PAYE. The only question is, what is the best way to receive payment until everything is set up and I have a contract in place.
In relation to the shareholding, the best way to structure this depends on your own circumstances. If the shareholding is modest (and so is the investment), (S)EIS may be a way to go about this (restrictions apply). Any financial advice of this nature is far outside the general advice a forum can give as I've spent many years in business but am not an accountant or legal advisor.
I can spell, my iPad can't.
I'll mention a service contract to by boss and the accountant. Perhaps that has VAT implications though?
I'll probably hold fire a bit longer as this will be a lot simpler if all payments are received via PAYE.Β
So, the contracts need to be sorted before anyone can determine:
a) how much is due to be paid
b) when it is due to be paid
c) who and what is due to be paid (employee, contractor, director etc)
d) how it is due to paid and reported (PAYE, gross, dividend)
Whether you're self employed or not will be determined on the facts of the contract and working relationship in practice (not just what's on paper). What I can say is that I've never seen "the employer isn't set up for PAYE" as one of the relevant facts in making the determination of employment status for tax purposes.Β