I have been working on “self employed” basiss for last 2-3 years just with one agency. Recently they have contacted me requesting certificate for LTD company. Which i don’t have as I’m self employed. I’ve been told that this was mistake that I have been accounted this way all this time and I have to go either LTD or been paid over “AB” offshore company which will take 5% in fees of my wage.
Upon my attempts of finding out why is that what is this company actually doing and what sort of legislation change triggered this action I was only told:
“HMRC” get tougher and no sole trading is anymore allowed, “AB” offshore company is doing my accountancy and I can only use “AB” as it’s only company that has signed contract for this service with my agency.
The whole thing smell very fishy to me (no suprise ) I don’t want to go LTD. as I’m planning to be out from country in next 6 months. Recently I was looking aorund for another job/agency but couldn’t find more suitable deal then the one I’ve got now therfor I would like to stay where I am. However at the moment they have hold my payment until I decide to go LTD or pay extortion money (as these is the way i see it).
This happened to me in the Manchester area 6/7 years ago, I have been self employed and VAT registered since 1982 and have a 100% payment history with HMRC. I argued with the tax office at Bootle for many months to no avail, as agency work was only a small part of my income I agreed for them to tax me as employed with an emergency code.
I worked for several agencies and none would pay me on a self employed basis and all tried to steer me in the direction of various ‘umbrella’ schemes which all smelled of rip off and kickbacks to the agencies to me. I stopped doing any work through agencies soon after so don’t what the current situation is.
The most simple thing to do is set up a LTD company, It takes about 10 minutes online and costs less than £20.
Just register it as dormant if you leave the country in six months.
I have been working on “self employed” basiss for last 2-3 years just with one agency. Recently they have contacted me requesting certificate for LTD company. Which i don’t have as I’m self employed. I’ve been told that this was mistake that I have been accounted this way all this time and I have to go either LTD or been paid over “AB” offshore company which will take 5% in fees of my wage.
Upon my attempts of finding out why is that what is this company actually doing and what sort of legislation change triggered this action I was only told:
“HMRC” get tougher and no sole trading is anymore allowed, “AB” offshore company is doing my accountancy and I can only use “AB” as it’s only company that has signed contract for this service with my agency.
The whole thing smell very fishy to me (no suprise ) I don’t want to go LTD. as I’m planning to be out from country in next 6 months. Recently I was looking aorund for another job/agency but couldn’t find more suitable deal then the one I’ve got now therfor I would like to stay where I am. However at the moment they have hold my payment until I decide to go LTD or pay extortion money (as these is the way i see it).
Can any one comment advice me on all these?
Many Thanks[/quot
Hi,
Todays news shows up a problem, a big agency has been playing fast and loose with the system, now they are all running scared and are worried that a big bill will land on their doormat…So instead of taking a risk for making profit they are now all wanting to look squeeky clean HMRC , they will all loose a bit of cream off the top and you loose lots out of your pocket…Looks like the loophole will go now…Sorry Pal,
So leave the uk before 180 days are up and you can get all of this years payments back !!!
And that works for sure.
I suspect it’s actually the other way around. The umbrella would owe money to the taxman IF you stayed Sole Trader, but YOU would owe it if you took their advice, which is to save their own worthless necks rather than yours of course.
It seems HMRC might even push towards umbrella actions counting as some kind of Embezzlement.
Interesting. I am seld employed but do not work for agencies. My mate is working for agencies. Neither of us are Limited, look like we need to do some homework…
limeyphil:
The most simple thing to do is set up a LTD company, It takes about 10 minutes online and costs less than £20.
Just register it as dormant if you leave the country in six months.
This has worked for me. It satisfies the agency (I don’t tell them that the co is dormant) and I carry on as usual with HMRC. I do a self assessment tax return (soooo simple) on line
limeyphil:
The most simple thing to do is set up a LTD company, It takes about 10 minutes online and costs less than £20.
Just register it as dormant if you leave the country in six months.
This has worked for me. It satisfies the agency (I don’t tell them that the co is dormant) and I carry on as usual with HMRC. I do a self assessment tax return (soooo simple) on line
Im self employed and do self assessment , any work done by agency I am on BR emergency code , then when get P60 at end of tax year submit in with self assessment on-line easy to do all the forms on-line , any monies you overpay on emergency code are repaid back to you ,
Jennie:
Im self employed and do self assessment , any work done by agency I am on BR emergency code , then when get P60 at end of tax year submit in with self assessment on-line easy to do all the forms on-line , any monies you overpay on emergency code are repaid back to you ,
In that case Jennie, you are in a similar situation to the OP, though the P60 bit means you are part PAYE at the moment as well, but you are essentially self employed on a sole trader basis, however his agency is insisting on him changing to Ltd Company status. The agency I was with did this a while ago - when the Agency Working Regs came in they said it was Ltd Co. or nothing, their reasoning being that they would be able to distance themselves even further from any grey area of bogus S/E and 12 week working rules. So don’t be too surprised if you get a similar call.
Jennie:
Im self employed and do self assessment , any work done by agency I am on BR emergency code , then when get P60 at end of tax year submit in with self assessment on-line easy to do all the forms on-line , any monies you overpay on emergency code are repaid back to you ,
Surely, if you’re self-employed, you’ll be paid gross with no deductions from the firm that pays you, even if it’s an agency?
It’s then upto you to pay the right amount of tax and NICs.
If you get a BR code, then you’re almost certain to have too much both tax and NICs deducted, and although you can apply for a basic tax rebate, I didn’t think you could get any overpaid NICs back at year’s end?
limeyphil:
The most simple thing to do is set up a LTD company, It takes about 10 minutes online and costs less than £20.
Just register it as dormant if you leave the country in six months.
This has worked for me. It satisfies the agency (I don’t tell them that the co is dormant) and I carry on as usual with HMRC. I do a self assessment tax return (soooo simple) on line
Fine, however setting up ltd equals “employing” accountant doesn’t it?
At the moment I want to come down with trucking to “part time” 4 day a week, I’ll be absent on several occasions this year, I’ll probably do max 13-15k£ this year do you think it’s still worth to setup ltd?
Euro: let me get this right. Are you saying that you have setup ltd. put it dormant and carrying on issuing invoices and doing self assestment with HMRC? How does that work?
Jennie:
Im self employed and do self assessment , any work done by agency I am on BR emergency code , then when get P60 at end of tax year submit in with self assessment on-line easy to do all the forms on-line , any monies you overpay on emergency code are repaid back to you ,
Surely, if you’re self-employed, you’ll be paid gross with no deductions from the firm that pays you, even if it’s an agency?
It’s then upto you to pay the right amount of tax and NICs.
If you get a BR code, then you’re almost certain to have too much both tax and NICs deducted, and although you can apply for a basic tax rebate, I didn’t think you could get any overpaid NICs back at year’s end?
I do the same as Jennie. My S/E work is more than my PAYE. So at year end you tally every thing up and pay the tax man the balance/claim a rebate. In 5 years of doing it I’ve always got a rebate.
You’ll be very lucky to find an agency to pay you gross as a SE sole trader. All want either LTD/umbrella scam.
Henrys cat:
I do the same as Jennie. My S/E work is more than my PAYE. So at year end you tally every thing up and pay the tax man the balance/claim a rebate. In 5 years of doing it I’ve always got a rebate.
You’ll be very lucky to find an agency to pay you gross as a SE sole trader. All want either LTD/umbrella scam.
Ok, so I guess you are submitting your expenses and claim it against your PAYE income? Is that correct?
Also as Winseer has mentioned above what about overpaid NIN contribution, as this way you ending up paying both self employed and PAYE NIN or am I wrong?
Jennie:
Im self employed and do self assessment , any work done by agency I am on BR emergency code , then when get P60 at end of tax year submit in with self assessment on-line easy to do all the forms on-line , any monies you overpay on emergency code are repaid back to you ,
Surely, if you’re self-employed, you’ll be paid gross with no deductions from the firm that pays you, even if it’s an agency?
It’s then upto you to pay the right amount of tax and NICs.
If you get a BR code, then you’re almost certain to have too much both tax and NICs deducted, and although you can apply for a basic tax rebate, I didn’t think you could get any overpaid NICs back at year’s end?
There is a form you can download via HMRC website to claim back any overpaid NIC’s.
I got a NIC claim back from HMRC a number of years ago when I was running a truck as O/D with a full time driver and also working PAYE for a completely separate company.
Big Truck:
There is a form you can download via HMRC website to claim back any overpaid NIC’s.
I got a NIC claim back from HMRC a number of years ago when I was running a truck as O/D with a full time driver and also working PAYE for a completely separate company.
Cheers Ill look into that just assumed the NIC`s where refunded to or offset to tax bill
thanks
Henrys cat:
I do the same as Jennie. My S/E work is more than my PAYE. So at year end you tally every thing up and pay the tax man the balance/claim a rebate. In 5 years of doing it I’ve always got a rebate.
You’ll be very lucky to find an agency to pay you gross as a SE sole trader. All want either LTD/umbrella scam.
Ok, so I guess you are submitting your expenses and claim it against your PAYE income? Is that correct?
Also as Winseer has mentioned above what about overpaid NIN contribution, as this way you ending up paying both self employed and PAYE NIN or am I wrong?
Mines very compilcated, due to self employed work, a partnership in a farm, agency PAYE at BR and proper tax code on railwork PAYE. Basicaly all payslips, invoices, farm accounts, and any expenses are thrown at the accountant and he works it all out of less than half what an umbrella firm charges for a year, and usually get a nice rebate too.
) I don’t want to go LTD. as I’m planning to be out from country in next 6 months. Recently I was looking aorund for another job/agency but couldn’t find more suitable deal then the one I’ve got now therfor I would like to stay where I am. However at the moment they have hold my payment until I decide to go LTD or pay extortion money (as these is the way i see it).
