New Contractor questions

**fiddleabout** · 27 February 2004, 00:19

> I don't really understand the implications of this new IR591
nobody does - the details have not been announced.

If your wife is a qualified accountant why are you asking us monkies?

The answer has been spelled out numerous times on the ltd/umbrella - you can potentially save a few pounds using a ltd even if IR35 caught at the expense of some slight extra complexity in your life.

If you are non-IR35 caught (and especially if you can share the income) only complete cretins or the terminally lazy would use an umbrella as the savings are so great from using your own company (NI savings plus ability to avoid 40% tax bracket).

IR591 may completely upset the apple cart - it may mean you should maybe consider offshore - I'll have the details of at least 1 and probably 2 offshore schemes up on www.************.co.uk within a week barring last minute hitches.

Why are you so certain you are IR35 caught?

**snaw** · 27 February 2004, 10:44

Hi Fiddle,

Should have been clearer:, she is a qualified accountant in Aus, but she hasn't been an accountant professionally for a few years therefore a) UK tax laws are new to her, and b) It's been a while. Saying that she is the super organised financial type.

Initially when she gets there (Two weeks) she won't be working, though I think she would get something pretty quickly. I'm assuming from your response we should share the income from the company - would this apply even when she starts working herself?

On IR35 I figured that since I would an IT contractor in the same job for a while that I would be caught, is this not the case?

**EddieC** · 27 February 2004, 11:23

snaw,

It may be worth while joining the PCG as they can offer you advice and help on avoiding IR35. If you can avoid it, their subscription fees will have been money well spent.

www.pcg.org.uk/

And no, I don't work for them.

**Contractorumbrella** · 27 February 2004, 12:28

Hi Snaw,

I certainly agree with some of the points made here - often you are better off with a Limited Company. The only point I would make is that it is a big commitment if you decide that contracting is not for you after a few months or you are offered the permie job of your dreams. It is easier to leave an umbrella company to open your own Limited Company than the other way round. Good luck with the new contract whatever you decide

**fiddleabout** · 27 February 2004, 15:59

> I'm assuming from your response we should share the income from the company - would this apply even when she starts working herself?

When you run a company there are 2 main ways to avoid the 40% - which to use and whether you can use either depends on your circumstances.

With a partner not using their full allowance up to the 40% point some income can be pushed their way - through divvis and/or as co-sec salary. How much they already earn dictates what you do.

If you are both earning up to the 40% mark you should be well able to afford to leave money in the company and dribble it out in lean times - IR591 is likely to bugger that up too though.

None of it is rocket science - you can do most of the sums on a fag packet.

**roger rabbit** · 27 February 2004, 17:37

“Initially when she gets there (Two weeks) she won't be working, though I think she would get something pretty quickly”

snaw if she ain’t up and at em earning, she should be flat on her back earning mate - I’d have her flashing her tush in a short skirt at the traffic lights and charging £50 a trick if she wasn’t earning from day one mate, strewth. Call yourself a businessman?

"None of it is rocket science - you can do most of the sums on a fag packet."

If that's the case why do you happily hand over 1K or so a year to some hapless accountant to do it for you fiddle?

**fiddleabout** · 28 February 2004, 19:28

My accountant does the paye, vat, corp tax, company returns etc. for well less than that - £50 + vat per month - my accounting takes me less that half an hour a month to shove the invoices and expenses in an envelope and post them off.

I used to have a local accountant who charged nearly twice that plus I had to do the paye & vat and maintain a record of the invoices and expenses taking maybe a couple of hours or more a month. If I did the lot it would take me probably 3 hours and I rate my free time at more than £50 for 3 hours so I use an accountant - plus of course they get it right so I don't get hassle.

The sums I was talking about are the calculations on what to pay as salaries, what to pay as divvis, and what to leave in the company - they are fag packet jobs.

Is it true what I heard that tax advising is for those who find normal accountancy too exciting?

**ZZZAAA** · 29 February 2004, 23:20

F-A,

"I rate my free time at more than £50 for 3 hours"

A few months ago, wasn't it you who advocated a time consuming scheme to overpay the IR corp tax, to save a few pennies? And are 4946 posts to this board cost effective?

You have to maintain income and expense records to communicate to your accountant. In my simple case it was easy to knock up my own PAYE and VAT calcs on a spreadsheet and communicate directly to the IR and Customs and Excise, for no effort beyond a few hours initial set-up.

**fiddleabout** · 1 March 2004, 21:53

not guilty

> A few months ago, wasn't it you who advocated a time consuming scheme to overpay the IR corp tax, to save a few pennies?

No - I did mention that the IR pay higher interest rate now than Cater Allen so providing making the payment doesn't drop you below £10k it may be worthhile paying early

> And are 4946 posts to this board cost effective?

Google indexes this board. In the days when sigs were allowed it certainly helped the google rankings of a number of my sites. Now sigs have gone I post far less frequently - usually when I'm waiting for something to complete (like now)

> You have to maintain income and expense records to communicate to your accountant.
the agency wants an invoice - printing an extra copy takes minimal time - same with expenses.

> In my simple case it was easy to knock up my own PAYE and VAT calcs on a spreadsheet and communicate directly to the IR and Customs and Excise, for no effort beyond a few hours initial set-up.

I suspect that your "no effort" takes about 2 hours a month longer than my "no effort" on average.

New Contractor questions