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snaw
26th February 2004, 20:20
Hi folks,

Been reading through several pages of topics on umbrella/LTD and I'm still not sure of best way to go in my circumstances.

In a nutshell I am new to IT contracting in the UK (UK citizen been resident OS for several years).

I've been offered an IT contract position, which should last for at least 6 months. Pretty sure I will fall under IR35.

I plan on being back in the UK for 2-3 years max before heading off again.

Umbrella looks to be the easiest option for me, but I'm not certain.

A big factor is my wife is a qualified accountant (Non-UK, moved on to other things but skills are there), I'm thinking if this changes my situation vis a vis LTD or Umbrella, and if so could anyone recommend good websites/books/other material for us to research?

I don't really understand the implications of this new IR591 so any advice there is appreciated.

Also any umbrellas companies to definitely avoid? Orange genie seems to get consistently good comments, any others which rate highly?

Many thanks for any advice you can give, apologies for being the umpteenth poster asking.

fiddleabout
27th 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 (http://www.************.co.uk) within a week barring last minute hitches.

Why are you so certain you are IR35 caught?

snaw
27th 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
27th 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/ (http://www.pcg.org.uk/)

And no, I don't work for them.

Contractorumbrella
27th 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
27th 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
27th 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
28th February 2004, 19:28
My accountant (http://www.************.co.uk?acct=1) 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
29th 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
1st March 2004, 21:53
> 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.

roger rabbit
2nd March 2004, 10:40
"Is it true what I heard that tax advising is for those who find normal accountancy too exciting?"

No fiddle - the fable is

an actuary is someone who finds accounting too exciting.

antagoneyes
2nd March 2004, 15:07
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.

ZZZAAA

I've heard a lot of people bragging about doing their own accounts. Most have either missed opportunities or made costly mistakes. One or two have even been brave enough to admit as much on this board. perhaps you are not one of these but who cares! Your generalisation that doing your own accounts is the way to go is pure nonsense and may mislead people.

I service my own cars and motorbikes and save a fortune. The vehicles don't break down and I am confident in what has been done. I save more money each year in servicing costs than the fees for my accountant - big deal! I am not arrogant enough to suggest that everyone should service their cars however.

Is the message getting through?

fiddleabout
2nd March 2004, 16:19
> an actuary is someone who finds accounting too exciting
yes - I watched About Scmidt too - glad I didn't buy it :)

Oh - another point about that £50 - it's £50 pre taxation - if I left it in the company and drew it as divvi or salary I doubt I'd see much more than £30

ZZZAAA
3rd March 2004, 15:12
Antagoneyes,

"I am not arrogant enough...."

But you are arrogant enough to claim of those doing their own accounts "most have either missed opportunities or made costly mistakes". What's your evidence?

"Your generalisation that doing your own accounts is the way to go"

My "generalisation" was expressed as "my simple case". Maybe it's the same thing to someone whose main reading literature is Haynes manuals.

"perhaps you are not one of these but who cares!"

Contradictory. You ask me a question, then change your mind and claim not to care. It sums up the quality of your comments.

fiddleabout
4th March 2004, 00:44
If you're that clever I'd suggest you bin IT and take up accounting old boy - IT will be dead in the UK in a few years.

Mind you with IR591 contractor accounting will be too even sooner - the few left in the game will either be using umbrellas or offshore schemes.

antagoneyes
4th March 2004, 16:53
The truth is ZZZAAA I think you are an Ass and I would seriously like to kick you or possibly insert a hardback Haynes Manual where the sun don't shine.

ZZZAAA
4th March 2004, 23:27
Anatgoneyes,

Even your insults are dull cliche-ridden unoriginality. Forget the car. Give your brain a major service, and the next time you write, aim to rise above scraping the barrel of inarticulate mediocrity.

fiddleabout
4th March 2004, 23:58
> aim to rise above scraping the barrel of inarticulate mediocrity

you clearly need to read`the forum T&C - all posts have to be boring shite - yours have indeed met those conditions so you are safe. :D

antagoneyes
5th March 2004, 10:32
I don't think the guy is boring

Quite entertaining actually. Clearly limited on the intellectual front though - for ZZZAAA read Mr. 80. :lol

ZZZAAA
5th March 2004, 14:10
"Clearly limited on the intellectual front..."

If someone is to judge my intellect, I'd rather it were not someone incapable of performing a VAT calculation. And not someone whose idea of a cerebral activity seems to be tinkering with cars.

antagoneyes
5th March 2004, 14:22
Unfortunately Intellectual sparring with you ZZZAAA would be like being slapped across the wrist with a piece of wet lettuce.

I am content to deal at your level and trade insults - not too taxing in your case - thats a pun by the way:rollin

fiddleabout
6th March 2004, 14:40
ZZZAAA - it's nice to see somebody giving that miserable sod antagoneyes some stick but you still haven't answered my inferred question about how long your "no effort" takes each month.

As you are clearly not impressed with my accountancy offer perhaps I could tempt you with a nice offshore scheme (http://www.************.co.uk) that we (Fiddle & Rhino) are now offering.

Antagoneyes - perhaps you'd like to have a pop at that too?

ZZZAAA
8th March 2004, 15:14
OK. It was no "no effort".

Each month I would make a few book-keeping entries onto a spreadsheet. I would have done this if I had had an accountant anyway, so counted it as "no extra effort". With some Excel formulas (no macros or VBA), it was set up to give quarterly VAT totals, and feed values to the company's annual P&L and Balance Sheet statements.

But at company and PAYE year-end there was extra work. Eg the decisions about divi payments, changing tax and NI rates in the PAYE calculator, and supplying completed documents and returns. Otherwise for small companies Corp Tax is zero, and I did not have a car or stock to be depreciated through the company. Maybe this effort was about 7 hours per annum.

Thanks for the offshore scheme offer, but the above is written in the past tense, since I have already been operating offshore for a year.

snaw
8th March 2004, 16:51
Thanks for all the advice guys. I've decided to set up a limited company. I now have a couple of other questions if I could trouble you guys some more:

I need to set up a bank account for business and personal - any recommendations, or are the usual lot fine (Natwest/Barclays etc)

Can anyone recommend an IR35 specialist in London? I want to see a specialist to go through my contract and give me general advice on how I should operate to maximise my profits. The accounts I'll do myself (Well the wife will anyway).

Appreciate all the advice you guys are giving, many thanks.

planetit
8th March 2004, 18:09
Banks. The most important thing is to get one with little (or no fees). Lots of people (me included) use Cater Allen. They are OK, but no online banking. Someone else on here recommends Abbey. You can get free business banking with Nat West (there should be details somewhere on this site)

fiddleabout
9th March 2004, 07:21
When I started out contracting I used NatWest because my personal a/c is with them.

The free banking lasted a year only. The only way to get interest (and the rate was cr@p) was to constantly juggle money between the current and reserve accounts.

Might all be different now of course.

planetit
9th March 2004, 09:00
The free Nat West deal I was thinking of was arranged by SJD, and was available to all CUK users. It seems to have been replaced on this site with a free deal from Cater Allen, so maybe it’s no longer available.