Question from a newbie contractor with a unique situation

[multiuk]

Hi all,

I was wondering if you could help, as you might imagine for a newbie, the different company types (I've read the stickies and several threads) can be quite confusing. In fact, my situation is quite unique and even my contractor friends have differing opinions.

I work in desktop support in the financial sector in London. My CV has long been registered on several job websites and I am always getting calls and have excellent experience so am not afraid of waiting between contracts etc.

But I'm not sure what type of company to form. I will be doing contracts for around 250+ per day, probably on a 3 month renewal basis. I also have some other interests which are websites that I run that make me some minimal income, about 20 to 30 quid a month. I don't want to abandon these interests and indeed, intend to use some of the proceeds from contracting to fund these online activities as well. At the moment, I declare my earnings (losses actually!) on my tax return as I am registered self employed.

I also live quite meagrely and do not intend to up my lifestyle once contracting.

I'm wondering what the best way to go about contracting is...

...would it be to set up a Ltd company, it seems that I have a pretty good case as I would have more than one stream of income, albeit one dwarfing the other.

Or a standard umbrella company? It might seem peculiar to have on stream of income as a sole trader and one coming via an umbrella company?

And how about off-shore umbrella companies like ASMG? My friend is using them and I understand that many HNW individuals use them such as those working in the media. I know that some on here are wary of these offshore companies, but I just can't see all these big media types entering into it unless they were satisfied that it would be successful, after all if HMRC come after them, it would be very high profile. Again, it raises the question I mentioned earlier of these seperate income streams via different ways which might not be a good thing for me?

I would be so appreciative if anyone could be so kind as to help me with what I think is a fairly unique situation.

Thank you

[Red 7]

I would be so appreciative if anyone could be so kind as to help me with what I think is a fairly unique situation.

I've read your post a couple of times and I'm struggling to find the 'unique' bits of your situation ?

Word of advice though, when HMRC shaft you in a few years; will you still think that offshore schemes are a good idea ?

First you need to decide if you actually want to run a business, if your decision is 'yes', then you need to commit to doing it propery.

[TheFaQQer]

Setup a limited company. Then you can offset the losses that one side of the business makes against the other side.

That's what I do - it enables my wife to do her thing, with the associated costs etc. coming out of the company rather than out of my pocket.

Best of luck!

[backagain]

Offshore is great if your are not onshore. Or to put it another way, what you earn onshore is taxable, and offshoring this income is illegal. So when the IR catch up with you they will corner your onshore client and ask them how much they paid you. Then they will ask you why you did not pay tax on it. Then they will work how how much tax you will have to pay them back and then charge you interest on top of that...

If you are offshore and get the money offshore, and providing the money is kept offshore and hidden, then they cant get you.

Probably best for you to go Ltd.

[Euro-commuter]

...It might seem peculiar to have on stream of income as a sole trader and one coming via an umbrella company?

Why? Nothing special about that.

If you contract, you could do that through an umbrella or a Ltd. Either way, you can continue being a sole trader in other activities (why on earth shouldn't you?).

If you form a Ltd Co, you could choose to do all your activities through it. If you anticipate some of your activities not always making a profit, there is an obvious advantage to it. However I'd guess that if your main, profitable, activity is judged to be within IR35, you would not be able to offset losses on other activities against profits from this.