Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.
Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.
Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.
The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]
The risk of an investigation has been significantly elevated, so advises Contractors Umbrella Company, because HMRC has been ordered to reduce the tax gap from £40bn to £33bn over the next four years.
Fresh initiatives against tax avoidance and harsher penalties against those breaking the rules are on the way. Improved systems capitalise more effectively on the vast amounts of information it holds.
They are able to compare results of individual companies with competitors, or with historical trends, to identify anomalies.
HMRC uses the expression 'breaking the records'. This means that once an inspector has shown weaknesses in any area of a company's records, the credibility of the records as a whole can be undermined.
Worse still, HMRC will argue it has justification for extending its investigation into the private affairs of the owner.
Contractors Umbrella Company expects HMRC to target businesses perceived as high risk. Companies that persistently file late returns, or pay tax late without contacting HMRC to explain why.
A business that submits returns late does not take tax compliance seriously, and represents 'easy prey'. HMRC will also look at the sector in which the business operates, and from time to time, will target particular areas.
If you know something is wrong, don't try to hide it. An early, voluntary disclosure will reduce any final settlement with HMRC. Keep in mind that at the end of an investigation, a certificate of full disclosure must be signed.
Virtually all investigations are started because HMRC inspectors think there is tax at risk. The key is to identify the concerns and deal with them. That way, the case can be closed at the earliest possible opportunity.
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If you are or plan to be a freelance contractor, you must get to grips with IR35. Ignore IR35 and it could cost you thousands!
It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.
Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].
Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.