Clients not wanting to work with umbrella companies?

[thewinterkitten]

I just started freelancing and am operating as a sole trader because so far I've had 2 clients not wanting to deal with an umbrella company and pay VAT - has anyone else had this experience? I didn't want to have to deal with taxes and paying NI and things like that and just wanted to test out freelancing before committing to a ltd company, so thought an umbrella company the best bet, but it doesn't seem to be working out too well.

[sal]

How small are these clients you had? The only reason to moan against VAT is if they are not VAT registered, but there is a mandatory VAT registration for turnover north of 150k (correct me if i'm wrong about the number).

You can still go ltd and not register for VAT so you can invoice w/o VAT

[thewinterkitten]

They're small non-profits. I initially intended to just test out freelancing and didn't want to commit to a ltd - but I've now applied for a ltd company as it seems like the only sensible way.

[TheFaQQer]

How small are these clients you had? The only reason to moan against VAT is if they are not VAT registered, but there is a mandatory VAT registration for turnover north of 150k (correct me if i'm wrong about the number).

You can still go ltd and not register for VAT so you can invoice w/o VAT

If VATable turnover is over £81k then they should be registered.

[thewinterkitten]

I'll probably be working just enough to earn under the VAT threshold.

[original PM]

There is nothing to stop you staying as a sole trader.

You just find many companies do not like to deal with you as if you do not correctly pay your statutory deductions correctly (tax and NI) then the company who paid you could be liable.

Thing is also if you start running your own ltd and have a turnover of over £81k you have to register for VAT and so the end client would have to pay VAT anyway.

[Clare@InTouch]

If your clients are small non-profit types then probably don't want you charging VAT as they cannot reclaim it. Your only options are therefore sole trader or limited company, and staying below the VAT reg limit. Sole trader is less onerous in terms of paperwork, but less tax efficient than a limited. Still a better option if you're only thinking short term though.

[northernladuk]

There is an article published by CUK recently about why agents don't want to touch sole traders...

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