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billyd
18th November 2013, 12:49
Hi I’ve had a good read through all the threads but can’t find an exact answer to my situation. Sorry in advance but I think it will be easier if I explain what and where I’ve been working for the past 2 years before asking your advice on my last 3 paragraphs.

For the past 2 year I have been working away from home and living in lodgings and travelling home every 2nd weekend. I have worked for 2 different companies during this time.

The first company told me I needed a UTR number and that I had to invoice them for the hours I worked and deducted 20% of my earnings I was paid the remainder. I paid my NIC’s twice a year when HMRC ? sent me my bill and completed an online tax return last year.
The 2nd place also used my UTR number but I was employed through an agency. The agency advised me that I needed to register with (what I assume is an umbrella company) to cut a long story short, I registered with T and L contracting but this time I was sent a self bill with no deductions on it apart from their fee. I understand that I’ll need to complete and online tax return with my expenses and plan to do that soon.

I am now back at home in Scotland and again working with an agency. I think I’m now classed as an “a contractor” Before the work commenced I had to provide my National Insurance number to them and I was advised that I could either go PAYE or continue being paid with the same company I used whilst working in London. I opted to stay with T and L contracting but I’m still getting self bills with no deductions at all being made. So ………. How do I go about paying my NIC’s now ? and do I need to pay T and L contractors NIC’s as well ? and if that is the case will HMRC bill me for the employers % and my own % (sorry I don’t even know what the %’s are ?) I know when I was in London the NIC’s were very small so getting billed twice a year was fine, but if my way of thinking is correct if I continue this way then I’ll end up with a massive bill?

I’m on a better hourly rate than I would have been had I gone PAYE, but from reading some of the posts on here I think I might be better off being on the lower rate and letting the agency employ me rather than T and L ? My contract with them says “ I fall outside of35” and I also had to opt out of “conduct regulations 2003” My contract also says T and L will require a copy of my “certificate of Incorporation” and also asked that I supply a copy of my “VAT registration certificate” I don’t even know what these are or where I would get them.
I know this is a bit long winded but I have a gut feeling that I’ve done everything wrong. I have been working for 6 weeks now and really need to get this addressed ASAP, sadly I get bamboozled easily over the phone so would really appreciate the advice from you guys. I find it much easier to read and digest things, rather than phone calls.

Some of my work mates have told me to register with an umbrella company from Jersey and told me they get paid the minimum wage from them and the rest as a loan and that the company will take care of my NIC’s. This sounds to good to be true, so no doubt it can come back and bite you ?

LisaContractorUmbrella
18th November 2013, 13:34
welcome :wave:

Oh dear, you are in a bit of a pickle aren't you. First question - have you registered with HMRC as a sole trader or set up a Limited Company?

northernladuk
18th November 2013, 13:44
Wow, someone really needs to understand their situation better. I switched off at the point you said 'Employed though an agency'. I can't see how anyone can help you beyond that until you understand your own situation better.

stek
18th November 2013, 14:03
Some of my work mates have told me to register with an umbrella company from Jersey and told me they get paid the minimum wage from them and the rest as a loan and that the company will take care of my NIC’s. This sounds to good to be true, so no doubt it can come back and bite you ?

Suicide...

Clare@InTouch
18th November 2013, 14:10
Try emailing a specialist accountant, but tell them you're not available on the phone. It happens a lot as people are often at work and unable to sneak out, so they should be fine in answering any questions via email. Send a few firms a list of questions and you'll then have lots to compare, and cross check until you understand it all.

billyd
18th November 2013, 14:37
welcome :wave:

Oh dear, you are in a bit of a pickle aren't you. First question - have you registered with HMRC as a sole trader or set up a Limited Company?

When I worked in London, yes i registered with HMRC as a sole trader, and no I've never set up a Limited Company. To be honest I'm not too worried about all the London work, I'm more worried about the situation I'm in now that I'm back at home.

billyd
18th November 2013, 14:46
Wow, someone really needs to understand their situation better. I switched off at the point you said 'Employed though an agency'. I can't see how anyone can help you beyond that until you understand your own situation better.

I would like to understand my own situation better, hence the reason for asking for help from you guys, OK I realise I've messed up somewhere along the line, would it be correct if I said I'm now employed through T and L contracting, seeing as it's them that is processing my wages ?

LisaContractorUmbrella
18th November 2013, 14:57
When I worked in London, yes i registered with HMRC as a sole trader, and no I've never set up a Limited Company. To be honest I'm not too worried about all the London work, I'm more worried about the situation I'm in now that I'm back at home.

Then HMRC will be expecting you to submit a tax return for the work that you have done as a sole trader - this link will tell you what your responsibilities are https://www.gov.uk/set-up-sole-trader. Your current situation would appear to be that you are paying money to T & L and they are doing nothing other than taking money from you. Have you signed any sort of contract with this company? If not I would suggest that you declare this income on your self assessment as well and pay your taxes accordingly.

With regard to the company in Jersey with the minimum wage and loans - have a look here HMRC Scheme Enquiries (http://forums.contractoruk.com/hmrc-scheme-enquiries/) and I think you'll realise that it's not a great idea.

LisaContractorUmbrella
18th November 2013, 14:58
I would like to understand my own situation better, hence the reason for asking for help from you guys, OK I realise I've messed up somewhere along the line, would it be correct if I said I'm now employed through T and L contracting, seeing as it's them that is processing my wages ?

Not unless you have signed a contract of employment - and they are not processing your wages as they are not applying PAYE - they just seem to be taking a fee for doing precisely squat

billyd
18th November 2013, 15:12
Hi Lisa, yes I have signed a contract with them, I think I've been very stupid. The last paragraph of my contract says this

This contract is entered into with your company on the understanding that you are operating in business on your own account, and that having considered your position and taken advice you are satisfied that you outside of the difiniton of a "worker" or "agency worker" as defined in Regulations 2 and 3 of the Agency Workers Regulations 2010, and that you fall outside of IR35. You are required to sign a declaration to this efect as part of the Contract Confirmation Documentation enclosed with this letter.

Is it possible that I have unwittingly set myself up as a LTD Company ? and that's the reason they have asked for VAT Registration Certificate.

northernladuk
18th November 2013, 15:14
Is it possible that I have unwittingly set myself up as a LTD Company ? and that's the reason they have asked for VAT Registration Certificate.

LOL you can't make this up.

Scruff
18th November 2013, 15:16
Suicide is painless...

Suicide Is Painless (MASH Theme) with lyrics - YouTube (http://www.youtube.com/watch?v=xIIqYqtR1lY) :wave:

billyd
18th November 2013, 15:26
LOL you can't make this up.

For someone with over 14,000 posts I really don't find your replies helpful and if all your going to do is laugh then please refrain from posting.

What I should have explained from the beginning, is I'm posting on behalf of my husband who has buried his head in the sand to the point of us now not being on speaking terms so I'm trying to find the best solution whereby he's paying his tax and national insurance correctly, I'm sorry if I'm not using the correct terminology for your liking.

If you can provide any useful answers or if you need me to clarify things then I'm quite happy to do so.

SueEllen
18th November 2013, 15:38
He's laughing at you and some of us are rolling our eyes because we can't believe someone would sign contracts without reading and understanding them.

You can be VAT registered as a sole trader.

I strongly suggest you do what Lisa from Contractor Umbrella has told you to do in previous posts.

Craig at Nixon Williams
18th November 2013, 15:41
From your first post, I can’t really tell how it is that you are currently working (umbrella/ltd company/offshore scheme) so can’t really give much advice without knowing more. If you are having 20% deducted at source, are you on the CIS scheme perhaps?

I would echo Lisa’s advice that you need to steer clear of offshore loan schemes as the chances are that HMRC will come back and bite you over these later on.

I’d suggest that you speak to somebody to explain your situation first of all as they can ask you the right questions to gain an understanding of your situation. You can ask them to put their advice to you in writing for you to go over if you are hesitant about doing this sort of thing over the phone.

Hope this helps!
Craig

GazCol
18th November 2013, 15:48
Does your husband work in construction?

northernladuk
18th November 2013, 15:48
For someone with over 14,000 posts I really don't find your replies helpful and if all your going to do is laugh then please refrain from posting.

What I should have explained from the beginning, is I'm posting on behalf of my husband who has buried his head in the sand to the point of us now not being on speaking terms so I'm trying to find the best solution whereby he's paying his tax and national insurance correctly, I'm sorry if I'm not using the correct terminology for your liking.

If you can provide any useful answers or if you need me to clarify things then I'm quite happy to do so.

The problem is you are in a very complicated situation which appears (to me at least) you don't fully have a grasp of. You are then trying to communicate this skewed situation to a bunch of strangers who are trying to make out the situation and then offer advice. So you see it's hardly ideal. If people can help they will need exact details of the situation, not guestimates or 'we might have done' I am afraid. To say you were employed by an agent and did we accidentaly set up a LTD etc just makes it nigh on impossible to advice. We don't know. Getting a clearer picture of your own situation might actually make the answer a lot simpler.

I would go back to T and L and ask them exactly what the situation is. No good asking us if you are employed by someone. You said you were employed by them but they suggested you got an umbrella. That would mean you are employed by the Umbrella and contracted to T and L. Did you sign up to an Umbrella. Are T&L doing your wages (wage slips, tax code etc etc) or just paying you money from the contract. You have to know these things before we can help.

LisaContractorUmbrella
18th November 2013, 15:49
Hi Lisa, yes I have signed a contract with them, I think I've been very stupid. The last paragraph of my contract says this

This contract is entered into with your company on the understanding that you are operating in business on your own account, and that having considered your position and taken advice you are satisfied that you outside of the difiniton of a "worker" or "agency worker" as defined in Regulations 2 and 3 of the Agency Workers Regulations 2010, and that you fall outside of IR35. You are required to sign a declaration to this efect as part of the Contract Confirmation Documentation enclosed with this letter.

Is it possible that I have unwittingly set myself up as a LTD Company ? and that's the reason they have asked for VAT Registration Certificate.

No, you can't set up a Ltd Co unwittingly. What you have done though is to sign a contract which enables the company you have registered with to abdicate any responsibility for your taxes. If you are working with a recruitment agency, they can't work with sole traders so they would expect you to set up your own Limited Company or work with an umbrella company. This agency seem to have directed you to a company that is operating some sort of tax avoidance scheme - an umbrella company should take you on as an employee and will pay you through PAYE - they shouldn't take a part of your earnings and then pay you gross.

If I were you I would set up a Ltd Co and register with a decent accountant or join a PAYE umbrella company and I would also calculate what tax you already owe so that you can put it aside to be paid at a later date.

northernladuk
18th November 2013, 15:51
Oh, and I know it's hard but your husband is going to have to pull his head out of the sand. It sounds like you could be in breach of contract with T&L if they expect you to be a company and you are not which could have your husband walked out of the gig. If you are going to go down LTD company route the director has a legal responsibility to do all this and not stick heads in sand.

SueEllen
18th November 2013, 15:53
billyd I suggest you contact either or both Contractor Umbrella (umbrella company) or Nixon Williams (accountants) - google for their details and explain your situation. One of them will help you get out of the mess you are in.

DirtyDog
18th November 2013, 16:32
Hi Lisa, yes I have signed a contract with them, I think I've been very stupid. The last paragraph of my contract says this

This contract is entered into with your company on the understanding that you are operating in business on your own account, and that having considered your position and taken advice you are satisfied that you outside of the difiniton of a "worker" or "agency worker" as defined in Regulations 2 and 3 of the Agency Workers Regulations 2010, and that you fall outside of IR35. You are required to sign a declaration to this efect as part of the Contract Confirmation Documentation enclosed with this letter.

Is it possible that I have unwittingly set myself up as a LTD Company ? and that's the reason they have asked for VAT Registration Certificate.

It is impossible to unwittingly set up a limited company. However, you (or your husband) has signed a contract with T&L which says that you have taken advice (which you didn't), and understand your situation (which you don't).

T&L are also under the impression that you have been working through a Ltd company, which is why they are asking for a certificate of incorporation and a VAT certificate.

Speak to an umbrella company. Speak to an accountant. Speak to T&L. Make sure you work out what you have done - only once you know what you have done can you work out what you need to do in the future.

billyd
18th November 2013, 16:33
He's laughing at you and some of us are rolling our eyes because we can't believe someone would sign contracts without reading and understanding them.

You can be VAT registered as a sole trader.

I strongly suggest you do what Lisa from Contractor Umbrella has told you to do in previous posts.

Yes I'll get him to follow Lisa's advice in post 8 which I somehow managed to miss and answered post 9 instead.


From your first post, I can’t really tell how it is that you are currently working (umbrella/ltd company/offshore scheme) so can’t really give much advice without knowing more. If you are having 20% deducted at source, are you on the CIS scheme perhaps?
Hope this helps!
Craig

I cant tell either and my hubby is worse than useless lol, I do know he's deffo not CIS tho, and nothing is getting deducted at source as all of his wages are going into his bank.


Does your husband work in construction?

Yes


I would go back to T and L and ask them exactly what the situation is. No good asking us if you are employed by someone. You said you were employed by them but they suggested you got an umbrella. No it wasn't T and L that suggested my husband get an umbrella company, T and L was the company he used while he was working in London, then when a different reqruitment agency (who he's with now) offered him work he just used T and L again to pay his wages, Oh dear I think I'm just making things worse while I'm trying to explain things.

Are T&L doing your wages (wage slips, tax code etc etc) or just paying you money from the contract. You have to know these things before we can help.
T&L are just paying money into his bank account, he gets emailed self billing with no deductions whatsoever. [/quote]


No, you can't set up a Ltd Co unwittingly. What you have done though is to sign a contract which enables the company you have registered with to abdicate any responsibility for your taxes. If you are working with a recruitment agency, they can't work with sole traders so they would expect you to set up your own Limited Company or work with an umbrella company. Thankyou, I'm starting to understand this a bit better now.

This agency seem to have directed you to a company that is operating some sort of tax avoidance scheme - an umbrella company should take you on as an employee and will pay you through PAYE - they shouldn't take a part of your earnings and then pay you gross. The recruitment company didn't direct my hubby to T and L, it was his choice to phone them up again after leaving the contract he worked on in London, When he started with his current recruitment agency they advised that he either go PAYE or through an umbrella, this is what he thought he had done when he signed the new contract with T and L [/quote]


If I were you I would set up a Ltd Co and register with a decent accountant or join a PAYE umbrella company and I would also calculate what tax you already owe so that you can put it aside to be paid at a later date.

Fortunately we have set aside 20% of his wages for tax, but he's also NOT paid any NIC's since he started and I'm assuming that wont be as cheap as it was when he was self employed. Would it be better for him just to go PAYE with the recruitment agency, he has no expenses he can claim for and is hopeful that this may be a long term contract, or is there an advantage going through umbrella ?


Oh, and I know it's hard but your husband is going to have to pull his head out of the sand. It sounds like you could be in breach of contract with T&L if they expect you to be a company and you are not which could have your husband walked out of the gig. If you are going to go down LTD company route the director has a legal responsibility to do all this and not stick heads in sand.

I completely agree

billyd
18th November 2013, 16:39
It is impossible to unwittingly set up a limited company. However, you (or your husband) has signed a contract with T&L which says that you have taken advice (which you didn't), and understand your situation (which you don't).

T&L are also under the impression that you have been working through a Ltd company, which is why they are asking for a certificate of incorporation and a VAT certificate.

Speak to an umbrella company. Speak to an accountant. Speak to T&L. Make sure you work out what you have done - only once you know what you have done can you work out what you need to do in the future. Thankyou you for clarifying the part about why T&L are asking for certificate of incorporation and VAT Certificate. and a big thanks to all of you who have had the patience to stick with this thread :) and yes I agree he should phone T&L up to get a better understanding of what he has done, it's getting him to agree tho, as said previous he's just buried his head in the sand and it's me that's having the sleepless nights :(

SueEllen
18th November 2013, 16:40
Fortunately we have set aside 20% of his wages for tax, but he's also NOT paid any NIC's since he started and I'm assuming that wont be as cheap as it was when he was self employed. Would it be better for him just to go PAYE with the recruitment agency, he has no expenses he can claim for and is hopeful that this may be a long term contract, or is there an advantage going through umbrella ?



Travel expenses he can probably claim for unless he's spend two years working in say the square mile. If he's like the contractors I know in various other fields it's unlikely he spends more than a few months in one location before moving to somewhere else and then coming back.

That's why I suggested in my last post to talk to either Contractor Umbrella or Nixon Williams.

GazCol
18th November 2013, 16:45
Yes I'll get him to follow Lisa's advice in post 8 which I somehow managed to miss and answered post 9 instead.



I cant tell either and my hubby is worse than useless lol, I do know he's deffo not CIS tho, and nothing is getting deducted at source as all of his wages are going into his bank.



Yes

No it wasn't T and L that suggested my husband get an umbrella company, T and L was the company he used while he was working in London, then when a different reqruitment agency (who he's with now) offered him work he just used T and L again to pay his wages, Oh dear I think I'm just making things worse while I'm trying to explain things.

T&L are just paying money into his bank account, he gets emailed self billing with no deductions whatsoever.


As this is CIS related you'll get a much better response asking your accountant or asking for advice on AccountingWeb - it's a different breed of contractor in these parts.

billyd
18th November 2013, 16:46
Hi Suellen, it's very likely that he will stay in the same 'square mile' at best he may be moved to another yard approx 15 miles from where he is now, plus as with all recruitment agencies they promise long term work but it doesn't always turn out that way, so he could find himself unemployed within the 2 years.

Thanks for your advice.

billyd
18th November 2013, 16:48
As this is CIS related you'll get a much better response asking your accountant or asking for advice on AccountingWeb - it's a different breed of contractor in these parts.

Hi Gazcol, he's not CIS ? he's not using a UTR number, he's using his national insurance number.

GazCol
18th November 2013, 16:51
Hi Gazcol, he's not CIS ? he's not using a UTR number, he's using his national insurance number.

He might not be; but the umbrella scheme used would have been. For that reason, and to get an accurate idea of exactly what liabilities are owed for that year you really need to speak to a professional in that area.

northernladuk
18th November 2013, 21:20
Hi Suellen, it's very likely that he will stay in the same 'square mile' at best he may be moved to another yard approx 15 miles from where he is now, plus as with all recruitment agencies they promise long term work but it doesn't always turn out that way, so he could find himself unemployed within the 2 years.

Thanks for your advice.

Just remember that if he is with an umbrella he will stay employed with them or if he is with a LTD he will still be employed by them.

It is a 40% rolling window about time on site so even if he does lose a gig the clock stops temporarily but if he still does over 40% in a rolling 2 year window he has to stop claiming. It's a complex area and you seem to be up to your neck in it so don't worry too much about the complexities of the 24 month rule. Just get your employment situation sorted first.

LisaContractorUmbrella
19th November 2013, 08:07
If you husband works in construction then I am not sure that he won't fall under the Construction Industry Scheme - have a read here HM Revenue & Customs: Deciding whether your work comes within CIS (http://www.hmrc.gov.uk/cis/intro/decide-if-cis.htm) just to make sure.

HTH