Setting up LTD and Caught By IR35

**Xenophon** · 13 September 2006, 15:24

Speak to SJD. In short - they tell me how much to pay myself each month and how much to pay in PAYE/NICs payments to HMRC.

Easy peasy.

**ASB** · 13 September 2006, 15:27

Originally posted by Charl1e brown74

I would need to run my own PAYE and pay myself a monthly salary (just like the umbrella would do) Can somebody point me to where this kind of information is listed in detail so as I can get up to speed ASAP.

You don't actually have to do that. But assuming you do the HMRC website is a good place to start. Type in something imaginative into the search box like "starting a new business". BTW they have a new employers pack, tells you pretty much exactly what to do.

**oraclesmith** · 13 September 2006, 15:48

Get some software too. Although I get my accountant to run payrolls for me and tell me what tax to pay, I enter all my transations in Sage Instant Accounts as well. If you're thinking of skipping the accountant, then you will have to do your own PAYE and Corporation Tax and self assessment returns as well. You may benefit from buying the payroll module as well and learn how to use it. If you go this way, get support too (for Sage it's Sagecover) because this gives you access to lots of accountancy/IT advice on how to run the systems.

Remember you won't necessarily avoid a PAYE compliance investigation, even though you have declared yourself inside IR35, because you could be getting the figures wrong or paying yourself some cash in hand. You will have to learn how to handle the HMRC yourself. I use a local largish and well-established accountancy firm because for the £1K a year or more it costs in fees, I get access to a lot of advice and they know how to deal with the HMRC because they're doing it for hundreds of other small and medium sized businesses every day of the year. Even though you may be spending on them what you save from ditching the umbrella, in my humble opinion you get a better deal.

Good luck.

**Diestl** · 13 September 2006, 17:37

Originally posted by Charl1e brown74

Hi,

Can anybody please`help with some information I am after.

I have 3 month rolling contract which is caught by IR35 (had SJD accountancy check it out for me)....

Why didn't you try and get the contract outside of IR35?

**dmini** · 13 September 2006, 18:38

Create a username on the SJD website - gives you access to lots of useful info - including their spreadsheet they use for all of the contractors they do accounts for. Its free, and its brilliant. Takes a bit of getting used to, but is a lot easier than many tools out there. It takes account of VAT registration, including flat rate, IR35 and non-IR35 contracts, even both in the same month, deemed salary calculations etc.
PAYE calcs on it are not so good, but HMRCs Employers CD ROM (you have to register with them as an employer) does all the calculations for you - I just have a tiny spreadsheet I use to do the end calc - Gross-PAYE-NIC, as a basic record. I also have another worksheet which will do a basic gross (what company can afford) to HMRC definition (minus employers NICs). Feed the end result into the employers CDRom calcs, and hey presto, its done! I didn't realise it was there until an accountant I was doing some work for told me!

There is no need to buy software, it is all out there, free, if you look - and legal!

**Charl1e brown74** · 14 September 2006, 08:26

Originally posted by Diestl

Why didn't you try and get the contract outside of IR35?

I did try, SJD reviwed the contract and I put the following points to the agent:

Services - perform personally OR substitutes - there should be ability for
you to provide substitute workers at your complete discretion. You are
named personally in the schedule and there is no substitution right.

Provision of equipment and facilities - it would be helpful if you are
required to provide equipment.

Responsibility for defective work - you should not be paid for defective
work and the contract should make this clear

Deciding methods of undertaking work - you should be in complete control of
the methods of work, again the contract should make this clear. Your
contract clauses at 7.1 especially 7.1.6 put control with the client.

Ability to take concurrent contracts - you should have an explicit right to
work for other end users at the same time during this contract.

Provision of insurance - it would be helpful if you were required to take up
business insurances.

Effective immediate termination - there should be no obligation for either
party to provide work. Clause 11.2.4 could put you in the position of
facing effective immediate termination. However as the other clauses
regarding termination would then all be defunct, it is likely the contract
would be held to effectively give you a right to notice.

The agency wouldn't budge, it was a classic case of take it or leave it. I took it. Needed the money! There reasonong was that they have an agreement with the end client and my 'contract changes' would have broken that agreement.

The agency were very negetive about 'IR35 friendly' contracts and I was even told by the accountant 'prossessional' at the agency that there is no such thing as an IR35 frendly contract!!! Long conversation was had but being new to contracting I didn't have all the answers to her direct and agressive questions.

I hate agencys

**Pondlife** · 14 September 2006, 08:34

Originally posted by Charl1e brown74

The agency were very negetive about 'IR35 friendly' contracts and I was even told by the accountant 'prossessional' at the agency that there is no such thing as an IR35 frendly contract!!!

Name and shame the agency.

**Cowboy Bob** · 14 September 2006, 08:45

Originally posted by Pondlife

Name and shame the agency.

Just a guess - sounds like Xansa...

**malvolio** · 14 September 2006, 08:58

To be fair, SJD do understand IR35 requirements very well, but this looks like a case where professional advisers and negotiators like Bauer and Cotterell would have helped. Use them next time.

Meanwhile, if you have a moderately unfettered right of substitution OR some discretion over where and how to do the work OR no right to money if there's no work and vice versa, any half decent representative will put you outside IR35 if challenged. So learn the rules and stop paying tax you don't have to.

Do not believe agencies - most of them don't even understand their own marketplace, much less the finer details of contract law. If they are using a contract that is intended to put you inside IR35, it's becuase their contract with the end-client has promised no risk of you claiming employment rights and this is how they think they will achieve it (but they've never heard od Dacas/Muscat so they're wrong!).

And finally - next time, the contract is between your limited company (or your umbrella) and the agency. You personally do not need to appear on any contractual statements: that is why you are inside IR35 for this contract, it has been made into a contract of service (i.e. you personally are doing the work) not a contract for services. Big mistake, don't do it again.

Setting up LTD and Caught By IR35