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  • FIRST POST
    • frogg
    • By frogg 9th Jan 19, 9:11 PM
    • 24Posts
    • 0Thanks
    frogg
    What should I do with new consultancy job
    • #1
    • 9th Jan 19, 9:11 PM
    What should I do with new consultancy job 9th Jan 19 at 9:11 PM
    Hi,

    Iím looking for some advice; Iíve been not-working for a number of years (my choice) but Iíve been asked to do some consultancy for (initially) 6 months. The contract specifically says 6 months, but there is a high probability of it being extended. The contract specifically states Iím responsible for any tax (I assume VAT is not included here)

    I am likely to earn over the VAT threashold hold within this six months.

    So my questions are:

    How should I organise? As a limited company, sole trader or use an umbrella company?

    Should I register for VAT immediately or wait until Iím over the threashold?

    As I will be working for only 1 company. And I cant suggest a replacement if Iím Ill, Iím certain Iíll Fall foul of the IR35 rules - so iíd Want to make sure that the tax man is happy with me and Iím not trying to get out of paying my fair share of tax.

    Thanks in advance for your advice.
Page 1
    • trailingspouse
    • By trailingspouse 9th Jan 19, 10:14 PM
    • 3,337 Posts
    • 5,513 Thanks
    trailingspouse
    • #2
    • 9th Jan 19, 10:14 PM
    • #2
    • 9th Jan 19, 10:14 PM
    You need to speak to an accountant - there really isn't a one-size-fits-all solution, and what is best for you depends on lots of variables.
    Many organisations won't use consultants who aren't operating as limiteds, but it's a serious step to take. Many accountants will give you 30 minutes of their time free of charge, so prepare your questions in advance and make the most of it.
    • frogg
    • By frogg 9th Jan 19, 10:29 PM
    • 24 Posts
    • 0 Thanks
    frogg
    • #3
    • 9th Jan 19, 10:29 PM
    • #3
    • 9th Jan 19, 10:29 PM
    Thanks, I was hoping to get some advice here.
    • trailingspouse
    • By trailingspouse 10th Jan 19, 8:22 AM
    • 3,337 Posts
    • 5,513 Thanks
    trailingspouse
    • #4
    • 10th Jan 19, 8:22 AM
    • #4
    • 10th Jan 19, 8:22 AM
    Yes, I know!


    And the advice is - speak to an accountant!


    I've been running a limited providing consultants to the pharma industry for 8 years. We only take on people who are themselves limited companies.



    It needs a lot of thinking about.
    • frogg
    • By frogg 10th Jan 19, 8:36 AM
    • 24 Posts
    • 0 Thanks
    frogg
    • #5
    • 10th Jan 19, 8:36 AM
    • #5
    • 10th Jan 19, 8:36 AM
    Thank you, Can I have other opinions please.
    • cmattingly
    • By cmattingly 10th Jan 19, 9:32 AM
    • 1 Posts
    • 1 Thanks
    cmattingly
    • #6
    • 10th Jan 19, 9:32 AM
    Determine IR35 Status
    • #6
    • 10th Jan 19, 9:32 AM
    The first thing to do is determine your IR35 status. There are many reputable sites that can assist you with this. Be honest with this process and don't try and gear an assessment to Outside IR35.

    If you are Outside, then talk to an accountant (who understands contracting) about your options and merits of setting up as a Limited company.

    If you are Inside IR35, go Umbrella.

    Be very wary of agency / end clients IR35 assessments, as they are financially motivated to assess you as Outside IR35. Most will try and pass all the risks (tax included) onto you through the contract.

    In terms of Accountants or Umbrellas, this industry is full of cowboys, so be very aware and make sure you understand what is going on. You should look for either FCSA / Professional Passport Accredited Members and even then double check their credentials, as there are plenty of scam merchants who pretend to be everything and promise you the world.

    Take home should be anywhere from 55-70% depending on your day rate, benefits and expenses. Given your original message, you look like a higher earner, so you are likely to be at the lower to middle end of that.

    Certainly anything higher than 70% is highly likely to be dodgy, so avoid. HMRC are turning the screws on this industry and the last thing you want is an tax enquiry.
    • Comms69
    • By Comms69 10th Jan 19, 9:50 AM
    • 6,416 Posts
    • 6,796 Thanks
    Comms69
    • #7
    • 10th Jan 19, 9:50 AM
    • #7
    • 10th Jan 19, 9:50 AM
    Thank you, Can I have other opinions please.
    Originally posted by frogg

    Sure, here's an opinion which is highly irrelevant and factually incorrect, but it's clearly what you wanted to hear....


    These are complicated area of law. An accountant can see the whole picture, we see only a fraction of the relevant information
    • motorguy
    • By motorguy 10th Jan 19, 11:05 AM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    • #8
    • 10th Jan 19, 11:05 AM
    • #8
    • 10th Jan 19, 11:05 AM
    The first thing to do is determine your IR35 status. There are many reputable sites that can assist you with this. Be honest with this process and don't try and gear an assessment to Outside IR35.

    If you are Outside, then talk to an accountant (who understands contracting) about your options and merits of setting up as a Limited company.

    If you are Inside IR35, go Umbrella.

    Be very wary of agency / end clients IR35 assessments, as they are financially motivated to assess you as Outside IR35. Most will try and pass all the risks (tax included) onto you through the contract.

    In terms of Accountants or Umbrellas, this industry is full of cowboys, so be very aware and make sure you understand what is going on. You should look for either FCSA / Professional Passport Accredited Members and even then double check their credentials, as there are plenty of scam merchants who pretend to be everything and promise you the world.

    Take home should be anywhere from 55-70% depending on your day rate, benefits and expenses. Given your original message, you look like a higher earner, so you are likely to be at the lower to middle end of that.

    Certainly anything higher than 70% is highly likely to be dodgy, so avoid. HMRC are turning the screws on this industry and the last thing you want is an tax enquiry.
    Originally posted by cmattingly
    +1

    Thats wholly it. There are lots of online status checkers including a (skewed) one from HMRC themselves.

    You can pay someone like QDOS to validate your contract for you. If they deem it outside IR35 they will stand over that if you get an inspection by HMRC.

    https://www.qdoscontractor.com/news/2018/08/29/determining-your-ir35-status

    And you're bang on with the 55%-70% from the day rate if inside IR35.

    What kicks it in the head are :-
    • Employers National Insurance (13.8%)
    • Apprenticeship Levy (0.5%)
    • Employees National Insurance
    • PAYE

    A lot of people dont realise they must pay the first two.

    If its inside IR35 i'd budget to receive 55% of day rate as net pay and see how the figures stack up.

    Outside IR35 and through a LTD co, then you'd probably be able to keep 75% of your day rate after taxes, accountancy fees, etc.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 10th Jan 19, 11:10 AM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    • #9
    • 10th Jan 19, 11:10 AM
    • #9
    • 10th Jan 19, 11:10 AM
    Sure, here's an opinion which is highly irrelevant and factually incorrect, but it's clearly what you wanted to hear....


    These are complicated area of law. An accountant can see the whole picture, we see only a fraction of the relevant information
    Originally posted by Comms69
    "an" Accountant may not be aware of the nuances of IR35. They will often just see black or white, not the many shades of grey / interpretation.

    If in doubt i'd use QDOS - its not a big amount of money in the grand scheme of things - to review the contract and make a decision. They will stand over their decision and pay your legal costs / represent you if they get it wrong. An accountant wont. Also an accountant will charge you for his time anyway, so not much of a saving to be made.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 10th Jan 19, 11:12 AM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    O/P - have a look around here....

    https://www.contractoruk.com/forums/

    Theres a wealth of knowledge.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • trailingspouse
    • By trailingspouse 10th Jan 19, 12:16 PM
    • 3,337 Posts
    • 5,513 Thanks
    trailingspouse
    I'll modify my original advice - do lots of research, and then speak to an accountant...


    Don't make any decisions until you understand IR35, VAT, RTI, NI, dividends, and the responsibilities that come with running a limited company. Once you go down that route, you're playing with the big boys - and saying you didn't understand something is absolutely no excuse when the proverbial hits the fan. You'll need an accountant anyway if you're going to do that, so you might as well start shopping around now.
    • frogg
    • By frogg 10th Jan 19, 10:02 PM
    • 24 Posts
    • 0 Thanks
    frogg
    Thanks cmattingly and motorguy! Food for thought. Iím pretty certain I fall foul of IR35 - certainly do on the HMRC test - and Iím not trying to dodge tax anyway. Iíll pay my fair share. I think it probably isnít worth using QDOS as it is clear that there is only one employer and I canít suggest a replacement for me.

    Basically, Iím happy to set up as a limited company and become an employee. If I can get 55-70% net, Iíll be good with that.

    Thanks for the great advice!
    • motorguy
    • By motorguy 11th Jan 19, 12:38 PM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    Thanks cmattingly and motorguy! Food for thought. Iím pretty certain I fall foul of IR35 - certainly do on the HMRC test - and Iím not trying to dodge tax anyway. Iíll pay my fair share. I think it probably isnít worth using QDOS as it is clear that there is only one employer and I canít suggest a replacement for me.

    Basically, Iím happy to set up as a limited company and become an employee. If I can get 55-70% net, Iíll be good with that.

    Thanks for the great advice!
    Originally posted by frogg
    There should be some free QDOS tests or similar, to give you a better confirmation. Likewise, try that contractor forum i mentioned. Theres a wealth of info on there.

    Also, they recommend certain umbrella companies - not all are equal - so i'd take advice on that.

    Also, dont go for ones that tell you they can get you 90%+ of your day rate - they cant legitimately and HMRC will come knocking soon. Stick with a reputable big player - i think contractor umbrella (catchily named) are the ones that contractor forum recommend, but they have an approved list.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • motorguy
    • By motorguy 11th Jan 19, 12:39 PM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    I'll modify my original advice - do lots of research, and then speak to an accountant...


    Don't make any decisions until you understand IR35, VAT, RTI, NI, dividends, and the responsibilities that come with running a limited company. Once you go down that route, you're playing with the big boys - and saying you didn't understand something is absolutely no excuse when the proverbial hits the fan. You'll need an accountant anyway if you're going to do that, so you might as well start shopping around now.
    Originally posted by trailingspouse
    No need to speak to an accountant if its inside IR35, which it appears to be.

    Also running a limited company isnt "playing with the big boys". Its something you spin up if you're in the O/P's position for tax or business relationship reasons then get your accountant to do your accounts for and do your returns. Simple enough done and purely a means to an end.
    Last edited by motorguy; 11-01-2019 at 12:49 PM.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
    • trailingspouse
    • By trailingspouse 11th Jan 19, 2:47 PM
    • 3,337 Posts
    • 5,513 Thanks
    trailingspouse
    No need to speak to an accountant if its inside IR35, which it appears to be.

    Also running a limited company isnt "playing with the big boys". Its something you spin up if you're in the O/P's position for tax or business relationship reasons then get your accountant to do your accounts for and do your returns. Simple enough done and purely a means to an end.
    Originally posted by motorguy
    But it comes with legal responsibilities that are yours to understand - you can't just say 'my accountant did it, I don't know anything about it.'
    • motorguy
    • By motorguy 11th Jan 19, 7:46 PM
    • 18,263 Posts
    • 11,176 Thanks
    motorguy
    But it comes with legal responsibilities that are yours to understand - you can't just say 'my accountant did it, I don't know anything about it.'
    Originally posted by trailingspouse
    Hardly playing with the big boys in the grand scheme of things - and a moot point as the O/P is inside IR35 by the sounds of it.
    "We have normality. I repeat, we have normality. Anything you still can't cope with is therefore your own problem."
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