Category: Consultant

5 reasons why your business should give you an IPad

Tablet

What do you use your IPad for? if you’re like me its for checking e mails and doing research related to business

So if its work related here are some great reasons why your business should buy it for you:

  1. Increased Productivity – If an IPad enables you and your team to work more effectively then why not start using them – Office 365 and Google Docs allow you to access your E Mails and Information easily any where any time
  2. Morale Boost – Getting a new IPad should improve morale
  3. Business Only – VAT – IPad’s and Tablets of all types are popular business tools and they are basically no different to a computer or laptop, if you can show that the IPad is necessary for work and there is only insignificant minimal private use then your business can reclaim the VAT, your business may set up a written policy to say that you can only use the the IPad for personal purposes in exceptional circumstances.
  4. Some Private Use –  in this case the business could still reclaim all the VAT if it charged you a hire charge for your private use of the IPad
  5. Capital Allowances – If its a business asset your business can claim capital allowances and reduce your tax bill

steve@bicknells.net

Why retainers are bad for consultants

Scaring amounts

A retainer fee is a fixed amount of money that a client agrees to pay, in advance, to secure the services of a consultant or freelancer. The fee is typically not associated with the success of a project or based on achieving particular results. A retainer is often paid in a single, lump sum, or on an ongoing basis (typically monthly or quarterly). [About.com – Consulting/Freelance]

The problem is that retainers create mutuality of obligation (MOO).

The significance of mutuality of obligation is that it determines whether there is a contract in existence at all. Without mutuality of obligation there can be no contract of any kind.

 

Only when the basic requirements for mutuality of obligation have been identified is it possible to then consider whether the contract is a contract of employment or a contract for Services (self-employment).

 

The basic requirements as to the mutual obligations necessary to determine whether there is a contract in existence at all are:

 

  • that the engager must be obliged to pay a wage or other remuneration, and
  • that the worker must be obliged to provide his or her own work or skill.

 

These basic requirements could be present in either a contract of service or a contract for services and, on their own, will not determine the nature of a contract.

According to HMRC, the irreducible minimum requirements for a contract of employment are:

  • the requisite mutuality of obligation present;
  • a sufficient degree of control being exercised on the part of the engager;
  • other provisions of the contract being consistent with a contract of employment

The very nature of a retainer fee arrangement attaches to it obligations, i.e. for the client to pay the freelancer an ongoing fee in return for the expectation by the client for the contractor to make themselves available, normally at short notice.

 

It’s almost impossible to argue that retainer fees would not fall within IR35 and be treated as Deemed Payments.

In order to stay outside of IR35 you will need to carefully consider the contract and identify employed status factors that will put you outside of IR35.

steve@bicknells.net

10 things your Finance Director should be doing….

Flying Superhero

SME’s often mis-understand the purpose of a Finance Director and the value they can bring to a business.

The job of a finance director is not just about producing regular accounts: they can help your company with strategy and development. If you want a small, stable business, then you can settle for a risk-averse book-keeper. But a good FD is key if you are growing your business because FDs develop future financial forecasts and push business growth. [Smarta]

So what should your Finance Director be doing for your business…..

  1. The FD should be able to look into to future to see what the future financial needs of the business will be
  2. He/She should negotiate funding facilities to ensure the business can manage its cash flow needs
  3. The FD should be able to foresee the future tax consequences and risks of decisions
  4. He/She should help the business to achieve the best possible credit scores
  5. Identify ways to reduce costs and improve profitability
  6. Understand the business owners objective and focus the business on achieving those objectives
  7. Ensure financial and regulatory compliance
  8. Ensure accurate and timely reporting of management information
  9. Evaluate growth opportunities
  10. Apply corporate governance

steve@bicknells.net

IR35 – How are deemed payments taxed?

And now round two of justify it

The Intermediaries legislation known as IR35 was introduced on 6th April 2000.

The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise –

  • For tax purposes, be regarded as an employee of the client; and
  • For NICs purposes, be regarded as employed in employed earner’s employment by the client.

Many Freelance Contractors have some assignments within IR35 and some outside, you can ask HMRC for their opinion.

If you would like HMRC’s opinion on a particular engagement you should send your contract(s) to:

IR35 Customer Service Unit
HMRC
Ground Floor North
Princess House
Cliftonville Road
Northampton
NN1 5AE

e-mail: IR35 Unit

Tel No: 0845 303 3535 (Opening hours 8.30am to 4.30pm, Monday to Friday. Closed weekends and bank holidays) Fax No: 0845 302 3535

If your contract is within IR35 its not the end of the world, the chances are that you will still pay less tax than a direct employee, to calculate the tax you have to work through 8 stages of calculation, here is a summary:

  1. How much were you paid? deduct 5% for business costs
  2. Add any other payments/non cash benefits
  3. Deduct business expenses – travel, meals, accommodation
  4. Deduct capital allowances relevant to the work done
  5. Deduct pension contributions made by your company
  6. Deduct any NIC paid by your company on your salary and benefits
  7. Deduct any salary or benefits already paid and taxed
  8. If the answer is zero or negative then there is no deemed payment, if the answer is positive you do have a deemed payment which will be taxable

HMRC have a spreadsheet you can download which has further details.

steve@bicknells.net

Top 3 reasons to be a Freelance Contractor

Young woman with checklist over shoulder shot

PCG published this story on 3rd July 2013:

Demand from UK businesses for contract workers is continuing to rise in 2013, which could be good news for freelancers looking to get their foot in the door on a lucrative new project.

According to the latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC), the appointment of temporary workers increased significantly during May and could be set for further increases in the future, while the overall jobs market continued to improve.

Despite the economic downturn, companies are still on the lookout for talented new employees, with demand surging after a slowdown in April. The findings pointed to more vacancies in the private sector than public sector roles.

So why would you want to be a Freelancer.

      1. Pay rates – generally contractors are paid considerably more than employees
      2. Flexibility – you are your won boss but the downside is that you have to find work
      3. Tax – the following is from Contractor Weekly and is a quote from Seb Maley (QDOS)

“Operating through a limited company as opposed to an employee brings significant financial benefits. By taking a small salary and high dividends you pay far less National Insurance, saving around 26%. There are obviously associated costs involved in running your own company, such as accountancy fees and insurance, but the overall ‘take home’ pay will still almost certainly exceed that of an employee.

But with the benefits there also comes risks. The IR35 legislation could affect any contractors working through limited companies and it’s vital that you take steps to ensure you are compliant. Contracting is also far less stable than permanent employment; you have been engaged as a temporary resource and your client can terminate the agreement at any stage. There is also the issue of illness; as a contractor you won’t receive any sick pay from your client, so any days not worked will hit your finances.”

But on a final note makesure you have the right equipment as explained in this sketch

steve@bicknells.net