Overview

A Construction Industry Scheme Contractor working through RACS and its third party, independent professional service providers will ensure compliance and qualified professional advice is achieved at all times. In keeping with new legislation around the contractor market place, a Personal Service Company allocated by RACS will give Agencies and Contractors the peace of mind of a fully compliant scheme.

Benefits

• Full National Insurance savings - direct dealings with the Personal Service Company and invoicing company.
• No employer / employee responsibilities.
• 1st class customer service - one point of contact.
• 48-hour set-up for Contractors.
• Full taxation support and an IR35-friendly contracts
• Easy invoicing (HMRC approved) - 1 weekly schedule - 1 weekly payment
• Reduction in VAT outlay saving 17.5% on cash flow - (many PSCs won't qualify for VAT registration)
• Guaranteed payment dates - (we have never missed a payment!)

Overview

Running your own Personal Service Company has many benefits.

Working as a Contractor and a Director through your company gives you total freedom, flexibility and the potential to earn and negotiate better rates with billing agents such as Recruitment Agencies and End User Clients.

Tax efficient models allow you to maximise on the expenditure realised in running your business.

As a shareholder of your company you decide what salary and dividend your company pays you from the profits it makes.

All of this can be achieved when you instruct the services of
third party professionals through RACS.

Minimal Fuss.

Maximum Control.

Services

RACS Collective will offer you (through third party providers):

• Full PAYE employment
• No IR35 worries
• No MSC legislation
• Dispensations for incurred expenses*
• Guaranteed expenses per pay period
• Easy to understand pay advice
• Guaranteed payment days
• Assistance with taxation issues
• Free processing of expenses
• Industry leading fee structure
• Professional insurance
• Sick pay insurance (optional)
• Single point of contact

*(no receipts required)

IMPORTANT

Genuine business expenses make this product work for you. Please ensure that you retain VAT receipts where applicable.

HMRC will allow genuine business expenses to be offset against PAYE taxation liabilities. Even though we have secured specialised dispensations for you, you must inform us that you have incurred these expenses in the first place.

Other providers do not always request this and as a result, the liability lies with the contractor.

Benefits

A Construction Industry Scheme Contractor working through RACS and its third party, independent professional service providers will ensure compliance and qualified professional advice is achieved at all times. In keeping with new legislation around the contractor market place, a Personal Service Company allocated by RACS will give you the following Benefits:

• Being a Director of your own company.
• Take a regular salary.
• Take regular dividends.
• Flexibility to pick and chose assignments.
• The ability to off-set expenses against tax liabilities
• Easy to use services
• Full accountancy support – Year End, Tax Returns (personal and business) Government submissions, payroll etc
• Integrated invoicing services (Freelancer Invoicing Services – FIS)
• Sick pay – up to £250 per week
• Easy to read pay advice
• Full customer care support
• Easy join-up process
• Other third party discounts and benefits
• Online membership to come!
• Guaranteed payment dates

WHAT IS IR35?

IR35 is tax legislation introduced in the 2000/2001 tax year. Its purpose is to ensure that those individuals who work through a limited company and who therefore treat a portion of their income as salary and a portion as dividend are entitled to do so. This largely hinges on the basic question “are you self employed or employed?”

Unfortunately, there are no hard and fast rules on this and it is initially the Tax Inspector and ultimately the courts, to consider each case that comes before them. As the legislation is still new, there are relatively few court rulings to help us, so the best you can do is to take reasonable precautions to consider whether the legislation could affect you. If the Inland Revenue decides that you should be regarded as “employed”, then you would potentially be liable for the tax that should have been paid had all your income been treated as subject to PAYE and NIC. This is largely the PAYE and NIC that you saved by working through your Recruitment and Services allotted PSC, subject to certain allowances.

You could also be charged interest on the amount you have been found to have underpaid – and possibly penalties as well, if the Inspector feels you are at fault.

HOW DO I DECIDE IF I'M SELF-EMPLOYED FOR IR35 PURPOSES?

Unfortunately, this is far from simple as there are so many possible interpretations that can be put on how you work, as each assignment can differ. However, there are some pointers that can help. Please consider the following sections carefully.

SECTION 1

If you answer YES to ANY of the following questions, you are most likely NOT operating as a self-employed person for the purposes of IR35 and would not qualify for RACS Group to allocate you a Personal Services Company (PSC).

The 'client' means the business you are providing your services to.

• Does your contract state that you are an employee of the client?
• Is it intended that you should become an employee of the client?
• When you commence your assignment, do you have good reason to believe it will be for a long period (say over 19 months) of time?
• Does the client usually request you provide services through your PSC?
• Are you a member of the client's pension scheme?
• Does the client pay you sick pay if you are off work? Does the client pay you holiday pay?
• Are your terms and conditions the same as the permanent employees of the client?
• Does the client give you a company car or van?
• Have you the authority to hire and fire the client's staff?
• Does the client have an obligation to offer you regular work?
• Do you have to accept work from the client if you're offered it?
• Are you eligible for redundancy notice or redundancy payments from the client?
• Do you use the client's letter headings and business cards, and claim expenses on the clients claim form?

It will help your case for self-employment for IR35 purposes if you can answer YES to the following questions:

• Could you (or your agency) find a substitute to undertake your work if you cannot undertake the work yourself?
• Having been allocated your assignment, you are given reasonable freedom as to how you complete it?
• Do you take any financial risk and use your own equipment on each assignment?
• Is your contract for as long as your services are needed, rather than for a fixed period?
• Do you regard yourself as being independent from the client and do permanent employees of the client regard you as independent from the client?

WHAT HAPPENS IF I CONSIDER THAT IR35 DOES NOT AFFECT ME - AND THE TAX INSPECTOR DISAGREES?

If the Inspector challenges your interpretation of how you work and how your tax should be assessed, you have two options. You can either accept this ruling or pay the tax that the Inspector considers that you owe, and any interest and penalties that may be imposed, or you can challenge his opinion by taking the case to court. RACS Group Limited is here to offer you reasonable help and assistance in the unlikely event your tax return is challenged.

WHAT IS THE TAX THAT THE INSPECTOR COULD WANT ME TO PAY?

If the Inspector believes that your employment comes within the scope of the IR35 legislation, he will want to assess your income as though you had been an employee and therefore subject to PAYE and NIC (both employee's and employer's) on your entire income. As you both wish to be, and consider yourself to be, 'self-employed' you wish to become director of your PSC for tax purposes, by dividing your income into salary and dividends, this could involve you having to effectively repay the tax you believed you had saved. You could also be liable for the interest and penalties on the underpaid tax as well. However, to do this the Inspector would have to show that the conditions of 'employment' were true for each and every assignment.