The provision of high level knowledge services in certain sectors of the UK economy has traditionally been delivered by individuals engaging through a limited company contractor.
This structure allows both the worker and the end client to obtain flexibility, outside of the constraints of modern day UK employment law, as well as both parties obtaining tax and national insurance savings. As you will be off payroll, you will need contractor accountants to help you run this business and declare and then pay the correct taxes.
We have developed a wealth of accounting/tax experience and insights into acting for such contractors, who typically require a mix of our services such as:
- Start-up assistance, including tax registrations.
- Using HMRC Employment Status Indicator to check your employment status for IR35/Off payroll working purposes.
- Company formation.
- Registering for the VAT flat rate scheme.
- Setting a book-keeping system up using cloud accounting software (so that we can provide support remotely).
- Assisting you to make this book-keeping system Making Tax Digital compliant.
- Preparing your annual statutory accounts and submitting a minimum disclosure filleted set onto the public record at Companies House, including optimised claims for:
- “24 month” rule for ordinary commuting travel.
- Scale rate subsistence and accommodation expense allowances.
- Home office expenses
- Submitting your annual business tax returns (company tax return) to HMRC, including, if you work on innovative client projects, claiming R&D tax relief.
- Preparing and submitting a self assessment tax return for you personally to HMRC.
- Before submitting these tax returns to HMRC, taking out tax investigation insurance to mitigate the potential extra professional fees that would arise if HMRC open a tax enquiry into one of your tax returns. Key risk areas for such an enquiry in this sector:
- Expenses (home working, travel & subsistence)
- Arctic systems/settlements legislation.
- Payroll (probably a ‘minimum salary, enough to receive a state pension ‘credit’, processed on annual basis).
- Cloud based book-keeping (including submitting VAT returns).
- Company secretarial duties, to maintain your filings on the public record ay Companies House.
- Issuing ‘alphabet shares’ to your spouse (to facilitate tax efficient profit extraction).
- Minimising IR35 exposure (if not subject to off-payroll rules administered by your client).
- Remuneration planning (tax efficient mix of minimum salary and dividends, and through involving your spouse).
- Bench-marking your turnover growth.
- Using employer pension contributions to tax efficiently extract profits and fund your retirement.
- Advising you how to close the company, through Dissolution or liquidation, if your contract ends and you go back ‘on the books’.
Our Tax Group “A Brief Guide to…” publications:
- Annual Investment Allowance | Individual Savings Accounts | Making Tax Digital | Off-payroll Working | Pension Death Benefits | Personal Tax Account | Research & Development Tax Relief | Tax Year End Planning
Get in touch with your local office and speak to one of our specialist contractor accountants, to see how we can add value to your business.
We offer a free initial consultation to potential new clients.
As an engineering manager, I started my own consultancy business ten years ago, with my wife as co-director. Whitings guided us in setting up the day to day accounting systems, that even the smallest company has to have, and have since looked after the annual accounts and tax matters.