Originally posted by pscont
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IR35 and Corporation Tax
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Originally posted by Herts47 View PostWhen I started this contract, I was told by the agency that I had to have my earnings paid into my Limited Company account. I had a battle in trying to get any understanding of how IR35 worked from them - and ended up doing my own research in the end. They told me I was not an employee but deducted PAYE and the payslip is in my name not my company - which technically makes me an employee. I didn't get paid holiday pay as "I wasn't an employee". I was told my employer would be my limited company. The VAT was added to my payslip as part of my earnings and I was sent an auto generated invoice.
So it's not me that has got myself into a pickle as you state. It's the agency not understanding the rules. They also taxed me far more than they should have as they didn't apply the correct cumulative code that HMRC sent them (found that out from HMRC the other day).
Hopefully my accountant will be able to resolve any issues with HMRC on the corporation tax, and he has submitted VAT returns in the normal way to them (and I've paid the VAT etc).
Anyway, there isn't a VAT liability to sort out since what you're being paid is VAT exempt (and should go into your own account, not YourCo's, but if it does it should come straight back out again. Similarly, no profit means no CT liability.
As has been said, if your accountant doesn't understand IR35 he is of no use to you and it looks from the outside like he's making things worse. That's not what you pay him for. Also CT, VAT and PAYE are handled by separate areas within HMRC so it's not surprising there is confusion of what you are actually liable for.
And after 20 years contracting I've yet to meet an agency - much less an individual agent - who understands IR35.Last edited by malvolio; 26 October 2018, 15:32.Blog? What blog...?Comment
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Originally posted by MonkeysUncle View PostA) It doesnt have to be paid to personal. Its just easier.
B) To the OP you shouldn't need to pay Corp Tax provided your accountant has set it up up right as a deemed employment payment (i think you said they have).Comment
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Originally posted by northernladuk View PostI'd get a new one then really. Its pretty key for us.Comment
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Hi Herts47
See here
Off-payroll working in the public sector: reform of the intermediaries legislation - technical note - GOV.UK
Particularly the 'Rebecca' example. Rebecca has been adding VAT and being paid to her ltd, which sounds like your situation.Comment
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Originally posted by mudskipper View PostHi Herts47
See here
Off-payroll working in the public sector: reform of the intermediaries legislation - technical note - GOV.UK
Particularly the 'Rebecca' example. Rebecca has been adding VAT and being paid to her ltd, which sounds like your situation.
Thank you for this link. Rebecca is exactly the same situation as me with the exception that I didn't earn anything outside of IR35 for the company year, and I went to permanent employment somewhere else in March. It looks like the agency have done this correctly then as they have generated the invoice with VAT, taken VAT off to calculate my PAYE due, then added back into my payment on my payslip that's then paid to my Ltd company. My accountant has calculated VAT due each quarter which I've paid as normal. As I haven't earned anything else outside of IR35 or paid employment, I would not expect to incur any corporation tax. My accountant will need to make it clear that I have already paid PAYE on all my earnings into my business account and am therefore not liable for any more tax. Hopefully! Really helpful information and thank you.Comment
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Moved to Accounting"I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
- Voltaire/Benjamin Franklin/Anne Frank...Comment
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Originally posted by mudskipper View PostHi Herts47
See here
Off-payroll working in the public sector: reform of the intermediaries legislation - technical note - GOV.UK
Particularly the 'Rebecca' example. Rebecca has been adding VAT and being paid to her ltd, which sounds like your situation.Comment
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'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by elsergiovolador View PostThis example doesn't raise any eyebrows? Rebecca receives £4200 as her salary, but draws only £3000 from the company. Isn't she misusing company account to keep personal funds? All the money (except VAT) from caught service is worker's personal money, so company cannot touch it unless the worker gives a loan to the company. What I am missing or the guidance hides inconvenient facts?
It would be easier to take it personally rather that via the LTD. but that's an option not mandatory.See You Next TuesdayComment
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