01993 252 339
Invoicing
Payroll
Limited Company Setup
VAT registration and Filing
IR35 advice
Take Home Pay Calcs
If you’re new to the world of contracting, it’s easy to feel overwhelmed with your new responsibilities. It is more than just adapting your approach to your work that you need to consider, you’re now also responsible for your finances, your career decisions and managing your business. That’s why having the right support network is crucial.
At Northfield, we provide insight and advice to contractors and freelancers on the many key decisions they face. We have a wealth of experience in dealing with every consideration, from whether to set up as a limited company or an umbrella, to IR35 and how it affects contractors.
Our experienced team can provide advice on all topics self-employed, no matter where you are in your journey. Whether you are starting out or you are an experienced contractor looking to brush up on certain aspects you may not have had to deal with for a while, we have you covered.
Our MD spent a number of years earlier in his career contracting across a range of industries via his own limited company, so the advice we provide is derived from personal hands-on experience and reflects the learnings gained during this time.
We know that the needs of contractors vary considerably, and the support you need will depend on time, knowledge, experience and confidence, amongst other things. That's why our contractor support packages are designed to be as bespoke as you need them to be, and can be tailored to suit your specific needs. All of the services we provide have a fixed fee attached, and you can engage us to provide as many or as few as you need, with fee discounts available dependent on the range of services provided.
For example, you may feel confident in setting up a limited company yourself and raising your own invoices, but would like some more specialist support in preparing your annual accounts or income tax self-assessment returns. Or you may have experience in preparing and submitting VAT returns, but want some advice on how best to structure payments to yourself via salary or dividends. Everyone is different, and so our packages are designed to be as flexible as you need them to be, with pricing to suit all budgets.
Our contractor services include:
Monthly invoicing
Payroll services
Take home pay calculations
IR35 advice and guidance
Limited company setup support
Annual confirmation statement filing
Year end accounts preparation and filing with Companies House
Corporation Tax return preparation and submission to HMRC
VAT registration and filing
Self-assessment income tax return
A NOTE ON IR35
The most significant legislative challenge you are likely to face in today's contracting environment
As a contractor, freelancer or small business, it’s important to have an awareness and understanding of IR35 and how IR35 status is determined to ensure that you are paying the correct amount of Tax and National Insurance.
What is IR35?
IR35 is a legislation that was introduced in April 2000. The legislation was introduced to ensure contractors did not contract through what HM Revenue and Customs define as ‘disguised employment’.
What is ‘disguised employment’?
Permanent employees would resign from their current job and then return a few days later, to the same role, but as a limited company contractor. They would have all the benefits of a permanent employee and would also benefit from the tax saving opportunities that came with being a limited company owner and because of this HMRC introduced IR35 to prevent people working under disguised employment.
As a contractor, your work is temporary which means you don’t have the same rights as permanent employees. For example: sick leave, holiday pay, company pension, healthcare etc. therefore, it is only fair that you benefit from greater tax relief. If caught, the disguised employee would be required to pay full NI and tax to that of a permanent employment. This is classed as ‘Inside IR35′.
How will I know if I am inside or outside or IR35?
The core areas that need to be present for your contract to fall outside of IR35 are:
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Control: it should be explicit that you control how the work is completed and that you provide a service through your own methods.
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Substitution: there should be the opportunity to substitute yourself for another suitably qualified person, or sub-contract whilst retaining the control and risk associated with this.
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Mutuality of obligations: outlining the obligations of each company to ensure that there is no obligation for further work when the contract ends (as would be expected by an employee). The contract needs to state a clear end date or termination of the contract based on the completion of the project or delivery of the contracted outcome.
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The right of dismissal: Notice periods are seen as indicative of employment by HMRC and so the client should have the right to terminate the contract immediately in the majority of circumstances, however some short notice periods can be defendable.
It is critical that you act and work as a separate entity to your client to fall outside of IR35. Your working practices need to reflect that you have a business to business relationship with your client.
There are some core areas that you can address as part of your overall business set up:
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Provision of your own insurance.
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Non-exclusivity (you work with many clients at once or have ability to do so).
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You accept a certain amount of financial risk (this can be rectifying errors at your own expense).
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Provision of your own training and equipment.
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Lack of employee benefits - It is important to ensure that you do not attract any employee benefits from the client.
The HMRC Check Employment Status for Tax (CEST) tool has been designed by HMRC to help contractors and contracting entities to determine a worker's employment status for tax and National Insurance contributions ( NICs ) purposes. It gives you HMRC 's view of a worker's employment status for tax and NICs based on the information provided.
However the tool has come in for significant criticism from the contracting community since its inception, due to the perception that HMRC has engineered its CEST tool to only pass contractors in cases of absolute certainty. It has been reported that in excess of 20% of tests return an inconclusive result, leaving both contractors that the entities seeking to engage them in limbo when determining employment status.
We can assist in determining your IR35 status on a contract by contract basis, including a review of your contract and recommendations on what amendments to request to ensure that you are not caught within the IR35 legislation.
Northfield Accountancy and Tax Services
Chartered Accountants and Business Advisors
01993 252 339
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