Freelance deisgner going Ltd

**malvolio** · 12 May 2006, 09:46

Join the PCG, then ask them and get definitive advice. Don't ask Hector anything.

The problem is s134C of the Finance Act 1984 - it makes a client potentially liable for contractors' unpaid NICs and PAYE if you don't pay them yourself. To get around this, they will only trade with you via a Limited company and they do not trade with Schedule D SEs. If they did, we would all be doing it!

It's nothing to do with IR35 per se, which is always assessed on a per contract basis, although if you have multiple concurrent clients it's a good pointer the right way.

**davestewart** · 12 May 2006, 15:58

> it's a good pointer the right way.

I assume by that you mean that if I'm always swapping contracts, as opposed to working for one company all the time, I'm in the clear.

Thanks for the info. By the way - why do you think I shoudl join the PCG?

Cheers,
Dave

**malvolio** · 12 May 2006, 16:54

Why join the PCG? Yo're a freelance, they're the only organsiation representing us and any freelance ought to be supporting them against this miserable excuse for a government (and even more miserable excuse of a chancellor) and their various battles to get a level playing field on tax and business management - for example, the recent result over the Visa scheme was 90% down to them.

Plus you get (mostly for free), qualified advice, protection insurance to cover you if you do get a Tax Investigation, some nice to haves like PI for £200pa and Jury Service cover and if you think you get good advice here, you should try their fora.

And in the background, standard fully approved contract templates and piles of other backing documentation, and informed comments on IR35, S660, IR5.91, the last budget, tax and pension planning...

Not that I'm biased or anything...

**davestewart** · 13 May 2006, 10:27

Well, I may well consider it. Just bought my flat so finances a bit tight at the mo

Thanks for the advice anyways...

**malvolio** · 13 May 2006, 10:33

Forgot to mention - £120 basic, £220 for the full deal. Immediate benefits worth around £1000 on the open market.

JFDI...

**ASB** · 13 May 2006, 10:38

Originally posted by davestewart

The latest company I've worked for wants me to go Ltd before they'll pay me. Because of my working practices, I think I'm outside of IR35. Is that right?

So, you've agreed the work, done it and now they say "you've got to go incorporate mate". I think my next stop would be he country coourt not the local company formation agents.

s/e Definitiely no IR335. From your description of yoour work patrern incorporated you're probably OK but you can never tell.

**TheMonkey** · 13 May 2006, 11:56

I tend to have either 2 concurrent things or nothing going on plus I have permanent research interests (non booked time goes down as research).

**davestewart** · 13 May 2006, 19:24

So, you've agreed the work, done it and now they say "you've got to go incorporate mate". I think my next stop would be he country coourt not the local company formation agents.

Ha ha ... well it wasn't exactly like that. The work was gained through an agency, so I have 2 options: 1) Get paid PAYE through the agency, 2) Incorporate and get paid direct. This time around I woudl prefer to go this route if poss.

Re: your second answer - thanks. Hopefully the IR can tell me on Weds.

**ASB** · 14 May 2006, 10:12

Originally posted by davestewart

Ha ha ... well it wasn't exactly like that. The work was gained through an agency, so I have 2 options: 1) Get paid PAYE through the agency, 2) Incorporate and get paid direct. This time around I woudl prefer to go this route if poss.

Re: your second answer - thanks. Hopefully the IR can tell me on Weds.

Fair enough, essentially because it's an agency S134 will force them down that road. But what you actually wrote was "The latest company I've worked for wants me to go Ltd before they'll pay me"

Looking to Weds there is no way on earth the IR will tell you that you are outside. [In fact they will NEVER tell you that, merely give you an opinion]. They will not give an opinion unless you send in contract for review -general advice is NEVER DO THIS.

One thing you might wish to consider is that one of the biggest pointers to being self employed is previously being accepted as such by the revenue. If you are generally happy to carry on being self employed one strategy used by a number of people is:-

- Use the Ltd to get agency work.
- Ltd subcontracts that work to the the individual (who has bid with an appropriate set of T&C's)

In general the IR appear to be happy with this, mainly because the difference between their take is not particularly large. The s/e person is paying tax on the entire profit and NI at the appropriate rate.

IR35 is not really about tax - where the losses are small. It's really about NI because remuneration via divis results in no NI payment at all.

Tell us how Weds. goes.

Freelance deisgner going Ltd